Hong Kong posts largest retail sales slump on record in 2020

[HONG KONG] Hong Kong posted its worst-ever retail sales slump last year as the Covid-19 pandemic battered tourism and consumption in the Asian financial hub, and the government warns it could take some time to turn a corner.

Retail sales in December fell 13.2 per cent from a year earlier to HK$31.4 billion (S$5.39 billion), government data showed on Tuesday, as a new wave of coronavirus infections hit a range of economic activities. It was the 23rd straight month of decline.

For the whole of 2020, retail sales provisionally estimated at HK$326.5 billion, dropped 24.3 per cent in value terms and 25.5 per cent in volume terms. They were the largest annual declines since records began in 1981, in both value and volume terms.

"The business environment of the retail trade will remain challenging in the near term amid frozen inbound tourism and the ongoing local epidemic," a government spokesman said.

Hong Kong's prolonged recession eased in the fourth quarter of 2020, with hopes for recovery largely hanging on the success of an upcoming vaccination campaign.

The slowdown has hit consumer sentiment and spending. The city's seasonally adjusted unemployment rate rose to a 16-year high of 6.6 per cent in October-December 2020.

To combat the Covid-19 pandemic, Hong Kong authorities have taken aggressive measures, including lockdowns of areas for compulsory Covid-19 testing, a ban on in-house dining in restaurants after 6 pm and the closure of gyms, sports venues, beauty salons and cinemas.

Hong Kong also banned all flights arriving from the United Kingdom days before Christmas after a new strain of the novel coronavirus was identified in Britain.

REUTERS