(GRAPHIC DESIGN BY ALEX TANG / CHINA DAILY)
Hong Kong’s retail sector is on track for a steady recovery after sales jumped 7.5 percent in November last year – the highest level since February 2015 – buoyed by improved tourist numbers and confident consumer sentiment, the latest data from the Census and Statistics Department show.
Retail sales in 2018 are projected to advance further by 5 to 8 percent
Carie Li, economist at OCBC Wing Hang
The better-than-expected figures confirmed the sector’s growth for the ninth straight month, with the expansion showing signs of widening. The value of sales climbed 3.9 percent year on year in October.
For the first 11 months of last year, retail sales in Asia’s financial hub increased 1.8 percent year on year, potentially spelling the end of a three-year downturn.
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The main contributor was a 27.4 percent year-on-year rally in sales of miscellaneous consumer durable goods, followed by a 12.5 percent expansion for medicines and cosmetics.
“If netting out the effect of the traditional peak season of Spring Festival in February of 2015, the 7.5 percent sales growth in November should be the record-high level since the beginning of 2014,” said Thomson Cheng Wai-hung, chairman of the Hong Kong Retail Management Association.
“For the whole 2017, a growth rate of more than 2 percent should be a reasonable estimate.”
Shoppers and pedestrians walk past a Rado Watch Co. store on Russell Street in the Causeway Bay shopping district of Hong Kong, on Aug 9, 2015. (XUAME OLLEROS / BLOOMBERG)
Cheng believed the robust November retail sales were largely brought about by high visitor arrivals, which increased 7 percent year on year in November – the biggest growth since March last year, according to statistics released by the Hong Kong Tourism Board.
The number of mainland tourists, who account for roughly 75 percent of all holidaymakers in Hong Kong, expanded 8 percent from a year earlier to 3.68 million and became the undoubted growth driver. This indicates a much-awaited bounce-back in the sector after two consecutive years of slump.
“I think it’s safe to say that the once-struggling retail industry in Hong Kong comes back on a normal growth trajectory,” Cheng said.
Riding high on the Christmas and New Year holidays, Hong Kong’s retail sector is set to begin the year on a strong note. For the upcoming Lunar New Year holidays, retailers in the city could expect to cheer on another fresh bout of strong sales.
“Due to the low base effect, the retail sales growth rate in December of 2017 may narrow a little bit. But this won’t change the upward trajectory,” Cheng observed.
“Basically, it may be difficult for the city’s retail industry to resume its rapid growth trajectory in its heyday. However, things keep improving,” he said.
“Amid low base effect, solid labor market and further improvement in tourism activities, retail sales in 2018 are projected to advance further by 5 to 8 percent,” said Carie Li, an economist at OCBC Wing Hang.
“The near-term outlook for retail sales remains positive, as consumer sentiment is buttressed by the favorable employment and income situation, and as inbound tourism continues to recover,” a government spokesman said.