Economy Hong Kong’s retail sales drop hardest in 17 years

Hong Kong’s retail sales plunged in February, as the economic slowdown in China prompted fewer visits from the mainland.

On an annual basis, the total value of retail sales in February dropped by 20.6 per cent to HK$37bn, from January’s 6.6 per cent drop. The drop in February was the worst since January of 1999.

After stripping out price changes, the total volume of retail sales decreased by 19.5 per cent, the worst since September of 1998.

Combining January and February figures, the value of sales of luxury goods like jewellery, watches and clocks, which mainland Chinese tourists often visit Hong Kong to buy, decreased by 24.2 per cent. This was followed by 11.4 per cent decrease in clothes, a 12.3 per cent decline in commodities in department stores, and 7.7 per cent decrease in medicines and cosmetics.

In a statement, Hong Kong’s Census and Statistics Department said:

Apart from the severe drag from the protracted slowdown in inbound tourism, the asset market consolidation might also have weighed on local consumption sentiment.

The near-term outlook for retail sales will still be constrained by the weak inbound tourism performance and uncertain economic prospects. The Government will continue to monitor closely the retail sales performance and its repercussions on the wider economy and job market.

With Chinese consumers unwilling to spend on luxury goods, Swiss watchmakers, known for their luxury watches, are having a hard time, with UBS cutting earnings forecast.