Hong Kong’s retail sector continues its slump, with sales by value shrinking by 24.3% year-on-year in October, a record drop for the city which experienced nine consecutive months of retail contraction.
By volume, retail sales plunged 26.2%, according to government numbers.
Sales of jewellery—China tourists' favourite shopping item in Hong Kong—fell 42.9% year-on-year in October after huge declines in August (-47.1%YoY) and September (-40.8%YoY).
Aside from tourist spending, domestic consumer spending is weak as well. Clothing sales fell 36.9%YoY in October after a fall of 25.9%YoY in September. A similar trend hit retail sales of shoes and accessories, which saw a decline of 37.0% YoY in October and 17.0% in September.
Iris Pang, an economist with ING in Hong Kong foresees a 6% decrease in employment in both retail and catering affecting some 35,600 people just in Q3 of the year.
“These people are themselves consumers,” she noted. “If they can’t find new jobs, this will put additional pressure on retail sales and will create more unemployment in the industry, thus creating a vicious circle.”
Pang also sees a 70% chance of a wave of retail store closures as a result of weak spending.
In a separate development, Hong Kong Chief Executive Carrie Lam said earlier today that the government’d soon announce new moves to give a boost to the city’s economy.
The new round of economic stimulus measures would be aimed at sectors that have been been “particularly challenged” through the unrest, she said.
The new measures would follow previous stimulus effort, including a HK$19 billion (US$2.4 billion) package in August.
In October, Lam added another HK$2 billion in economic support and new policies including loosened mortgage rules, compulsory land purchases for housing, cash for students, and increased subsidies for low-income families.
Financial Secretary Paul Chan warned on Monday that Hong Kong would see the first budget deficit for the fiscal year since the early 2000s while the ongoing social unrest has hurt the local economic growth by about 2 percentage points this year.
ING forecasts a GDP growth at -7%YoY for 4Q19 and the full year growth at -2.25% in 2019, which is close in scale to 2009's recession of -2.5%.
“Our GDP growth forecast for 2020 is -5.8%, assuming that the trade war uncertainty will still be present, the violent protests will continue for the whole year, and unemployment will deepen, not least because of the impact on retail sales,” she noted.