With Tourism Cut Off, Hong Kong Retailers Suffer

With Hong Kong remaining cut off from tourism, retail sales growth has missed expectations, Bloomberg News reported on Monday (August 2).

Business owners in the country are hoping for a lifeline in the form of consumption vouchers following a government report that shows retail sales by value growing 5.8 percent in June compared to a year ago to HK$28.1 billion ($3.6 billion).

That figure is considerably less than the 14.1 percent estimate from a Bloomberg survey of economists. It also marks the first time that growth has dipped to single digits since sales began rising again in February after a two-year slowdown. Sales by volume also rose in June by 2.8 percent, once again lower than the median estimate of 10.5 percent.

“With incoming visitors remaining scant, retail sales stayed far below the pre-recession level,” the government said in a news release. “The consumption voucher scheme will help stimulate local consumer sentiment and provide support to the retail sector.”

This weekend, Hong Kong began giving out the $5,000 HK vouchers to permanent residents and eligible immigrants over 18 years of age.

“Consumption remains a key laggard as the economy slowly emerges from a historic two-year recession driven by political unrest and the pandemic,” the Bloomberg report noted. “While the city’s financial services industry has proven resilient, the ongoing virus restrictions mean tourism and other retail services remain under pressure.”

Earlier this year, the Hong Kong Retail Management Association predicted that nearly 60 percent of retailers could close for good in the first quarter of 2021.

Hong Kong had a $72.9 billion (HK) (approximately $9.4 billion) retail industry two years ago, with most of those purchases being made by consumers from mainland China. But with travel limited by COVID-19, shopping centers have had to depend on local consumers to get by. Just 3,571 people visited Hong Kong from the mainland in November 2020, compared to 1.9 million the previous November.