Hong Kong’s retail transactions have grown at the slowest speed since July, with the public authority warning of further strain to come amid a flood in Covid cases. The value of retail transactions rose 4.1% in January from a year earlier, contrary to the average gauge of 0.4% in a Bloomberg survey of economists. Sales volume increased by 1.7%. The Lunar New Year – – which fell on February 1 this year – – generally helps to aid retail spending, the Census and Statistics Department said in a proclamation. The data covers shoppers’ spending on products but not services, for example, those on food, medical care and entertainment, which make up more than 50% of overall consumer spending.
Those comments were echoed by Annie Yau Tse, president of the Hong Kong Retail Management Association, who told reporters on Friday that the outlook remains bleak for February and March after stricter social distancing measures are put in place and the government prepares for mass virus testing and possible containment.
“The figure has yet to fully reflect the impact of the fifth wave of the local epidemic and the further tightening of anti-epidemic measures in the most recent period,” a government spokesman said in the communicated. “The retail sector will remain under immense pressure in the near term.”
The report is the latest indication of the economic pressure facing the Asian financial hub. Thursday’s data showed economic activity contracted in February, plunging to a 22-month low. Economists are already predicting that the economy contracted in the first quarter.
The current epidemic has already caused significant damage to the retail sector. A major drug retailer said this week it would close 53 stores in Hong Kong due to the pandemic situation and an online retailer said it was struggling to fulfill orders as 20% of its staff are in quarantine . Nightlife tycoon Allan Zeman said the government must include the business sector in its Covid decision-making process.
In a bid to boost retail sales, Finance Secretary Paul Chan pledged in his budget to give residents an additional HK$10,000 ($1,279) in consumer vouchers this year. Earlier subsidies last year helped boost monthly retail sales by double digits.
A survey of 3,600 stores found that sales in the last week of February fell 60% for businesses selling non-essential goods from the level in the first week, Yau Tse said. Most stores had to reduce their opening hours or close temporarily due to the growing number of infected employees and the decrease in foot traffic, she said.
“This outbreak is the worst Hong Kong has ever seen,” Yau Tse said. “Because of the impact, the domestic market will definitely take much longer to recover, and there will be many more challenges on the road to recovery.”
Summary of news:
- Hong Kong retail plunges to 6-month low as ‘tremendous’ stress looms
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