Hong Kong retail spending plunges to 17-year-low as visitors decline and yuan weakens
Analyst urges government to use data to improve tourism spending predictions
With retail sales in Hong Kong plummetting to a 17-year-low, experts have called on the government to take action to better predict tourist spending habits.
The city’s retail sales totalled HK$436.6 billion at the end of 2016, down 8 per cent compared to 2015, government figures released Friday showed. It marked the biggest drop in consumer spending since 1999.
Continuing a sustained decline in consumer spending in the city, retail receipts totalled HK$42.4 billion in December alone – a 2.9 per cent drop year-on-year.
But it wasn’t all bad news, as total sales in the fourth quarter were up 2.3 per cent on the third quarter, and December’s year-on-year sales decline narrowed compared with previous months, reflecting a revival in tourist arrivals that month, a government spokesman explained.
“Looking ahead, the near-term outlook for retail sales business will still depend on whether the recent improvement in inbound tourism could gain more traction and the extent to which local consumer sentiment would be affected by various external uncertainties,” he said.
Louis Tse Ming-kwong, director of VC Brokerage, said the drop in mainland visitors was the main reason for the retail slump.
“Before 2015, when the yuan was strong, [mainlanders] loved coming to Hong Kong. Now they prefer to go overseas to places like Southeast Asia,” he said.
Noting the continued weakening of the yuan against the Hong Kong dollar in the wake of Beijing’s currency devaluation in 2015, Tse said the latest retail figures were not surprising.
“The [retail market] has been gradually going down because the drop of the yuan has been more obvious than before, and continues to do so,” Tse said.
But now is not the time for the city to rest on its laurels, according to Peter Hopper, Asia Pacific managing director of consulting firm Strategic Decisions Group.
“The drop in retail sales serves as a reminder that we can no longer sit and wait for tourists to come and spend in Hong Kong,” he said.
Hopper urged the government to capitalise on transport, communications and telecommunications data to better predict tourist spending habits.
The Hong Kong Retail Management Association said most of its members were forecasting mid single-digit growth to low double-digit declines for January and February sales.
Visitor numbers from mainland China dropped 6.7 per cent in 2016, compared to 2015, dragging overall visitor numbers down by 4.5 per cent.