Hong Kong: Retail sales continue to crumble in December
February 4, 2020
Retail sales by volume declined 21.0% year-on-year in December, although less sharply than November’s revised 25.5% plummet (previously reported: -25.4% year-on-year). Ongoing civil unrest, which continues to keep tourists at bay, remains the key factor driving the downturn in retail sales as of late.
In December, tourist arrivals dropped 51.5% year-on-year, after nosediving 55.9% in November. Tourism is expected to remain suffocated in the first quarter as the recent outbreak of the coronavirus serves another blow to Hong Kong’s frail tourism sector. Hong Kong has closed its border off to almost all travel in and out of mainland China, while international airlines—specifically in the U.S.—have suspended flights to Hong Kong until further notice.
The slightly weaker deterioration in sales volume was mainly driven by less pronounced falls in sales of food, alcoholic drinks and tobacco; clothing and footwear; and consumer durable goods. That being said, all sectors barring fuel purchases continued to contract at an alarming pace in December.
On a seasonally-adjusted, three-month moving average basis, retail sales by volume in the October–December period dipped 6.7% from the preceding three-month period, softer than the 11.2% decline in September–November. Overall, the annual average variation in retail sales volume fell 12.5% in 2019 after growing 7.6% in 2018.
Looking ahead, protests are expected to keep the retail and tourism sectors depressed, but uncertainty over the coronavirus outbreak will likely also drag more on private consumption.
Author: Steven Burke, Economist