HONG KONG ⸺ Hong Kong’s retail sales jumped 30% in February due largely to distortions from the timing of the Lunar New Year, with the government hopeful that a successful COVID-19 vaccination programme will help the sector’s recovery.
The Asian financial hub has been in a prolonged recession since 2019, when anti-government protests scared tourists away and last year’s coronavirus outbreak choked domestic spending.
Retail sales in February totalled HK$29.5 billion ($3.8 billion), government data showed on Tuesday, snapping 24 consecutive months of decline. The surge was the biggest since February 2010.
The jump in February compared with a revised 13.7% decline in January. Retail sales, however, tend to show greater volatility in the first two months of a year due to the timing of the Lunar New Year, the government said.
“The retail trade will continue to face a difficult business environment in the near term as inbound tourism remains frozen,” a government spokesman said.
“It is thus pivotal to put the epidemic under control at the soonest possible, so as to create a favourable environment for the revival of cross-boundary tourism activities,” he added.
For the first two months of 2021 taken together, it was provisionally estimated that the value of total retail sales increased by 2.7% compared with the same period in 2020.
In volume terms, retail sales in February soared 31.7%, compared with a revised 14.6% fall the previous month. It was up 2.5% in volume for the two months together.
Hong Kong’s unemployment rate rose to a seasonally adjusted 7.2% in the December-February period, the government said earlier in March, as a surge in coronavirus infections late last year prompted new restrictions on a wide range of activities.
The Chinese-ruled city plans to run a much lower budget deficit in the coming fiscal year as the economy is expected to recover from its longest recession on record, Finance Secretary Paul Chan said in February.
Hong Kong’s economy is forecast to grow between 3.5% and 5.5% in 2021 after a 6.1% contraction in 2020.
Tourist arrivals plunged 97.2% in February from a year earlier versus a 99.9% drop in January, the tourism board said.
The value of online retail sales in February increased 56.5% year on year, that compared to 91.3% growth in January while it was up 74.5% for the first two months together.
Sales of jewellery, watches, clocks and valuable gifts, which depend heavily on mainland tourists, surged 114.1% in February versus a revised 31.6% plunge in January, the data showed. It was up 3.2% for the two months together.
Clothing, footwear and allied products surged 89.4% in February, compared with a revised 23.2% drop in January.
($1 = 7.7735 Hong Kong dollars)
Reporting by Donny Kwok and Twinnie Siu; Editing by Jacqueline Wong; Reuters