The coronavirus pandemic continues to deter consumer spending in Hong Kong, with travel restrictions halting tourist trade and government orders keeping residents away from stores amid fears of COVID-19’s spread.
According to the territory’s Census and Statistics Department, retail sales in March fell 42% from the prior year to HK$23 billion, or $2.97 billion — the 14th straight month of contraction and only a slight uptick from February’s record-low drop of 44%. By volume, retail sales in March decreased 43.8% from last year.
What’s more, retail sales during the first three months of the year were down 35% to HK$83.5 billion, or $10.77 billion. The report comes a day after Hong Kong reported that it suffered its worst quarter on record, with its gross domestic product declining 8.9% and extending its first recession in a decade. The government added that private consumption slid 10.2% during that period, while exports of services plunged 37.8%.
“The business environment for retail trade will remain very difficult in the near term amid the deep economic recession and sharp deterioration in the labour market,” a spokesperson for the Hong Kong government said in the statement accompanying the retail sales figures.
The Asian financial hub saw its economy begin to shrink last year when violent pro-democracy protests led to declining sales in stores and interruptions to business operations, which put pressure on retail rents. These effects have been exacerbated by the novel coronavirus, which originated in the nearby Chinese province of Hubei in late 2019.
Tourists have historically been a reliable source of revenues for many brands — particularly high-end names — in Hong Kong. (The region is estimated to account for 5% to 10% of global luxury sales.) However, the latest figures from the Hong Kong Tourism Board show that visitor arrivals for March plummeted by 98.6% year over year, falling to just over 82,200 for the month.
Despite efforts to reduce the impact of the pandemic, about 25% of retail stores in Hong Kong are expected to shut down by the end of the year. (According to the HKRMA, a total of 17,200 closures — out of the 62,400 retail stores — are expected in 2020.) The government has announced relief measures worth about HK$137.5 billion, or $17.7 billion, to help boost struggling businesses and individuals in the semiautonomous region.