Hong Kong retail sales plunge record 44% in February

Hong Kong

HONG Kong's shops and businesses buckled under the full force of the coronavirus outbreak in February as retail sales plummeted by the most on record amid growing travel restrictions and social-distancing measures.

Retail sales by value fell 44 per cent, the largest drop on record, to HK$22.7 billion (S$4.2 billion) according to a government release. Economists surveyed by Bloomberg had forecast a median 40.3 per cent decline.

The slide in February marks 13 straight months of negative readings. Retail sales by volume also dropped a record 46.7 per cent .

"The business environment of retail trade will remain extremely austere in the near term, as the Covid-19 pandemic has brought inbound tourism to a standstill and severely dented local consumption demand," the government said in a release.

Distortions from the timing of the Lunar New Year holiday also contributed to the declines, the government said.

Retail sales by value for the first two months of the year sank 31.8 per cent from a year ago, the government said.

Digging deeper into the two-month period, the value of sales of food, alcohol and tobacco dropped 9.3 per cent, along with a 58.6 per cent slump in jewellery, watches and clocks and valuable gifts, and broad declines across most other categories.

One bright spot in the report: The value of sales of commodities in supermarkets increased 11.1 per cent for the two-month period. Sales of fuel also rose.

This latest blow to Hong Kong's economy threatens to further extend a recession that began in 2019 after months of anti-China political unrest. The government currently forecasts growth in a range of +0.5 per cent to -1.5 per cent for the year.

Consumption in the city has been severely curtailed as mainland China tourists stopped visiting last year and residents have been staying home to avoid infection during the coronavirus outbreak.

Also on Tuesday, the latest figures show hotel occupancy in the city plummeted to 29 per cent in February, down from 91 per cent a year ago, according to the Hong Kong Tourism Board. Total visitor arrivals plunged 96 per cent from a year earlier to just over 199,000 for the month, the biggest drop on record and the lowest level since February 1984, the data show. Mainland arrivals sank 98 per cent, to fewer than 100,000 people. BLOOMBERG