Retailers are pinning their hopes on a string of celebrations marking the 20th anniversary of the handover as shoppers continued to tighten their belts at the start of the year. Retail sales fell 3.2 per cent in the first two months of the year even though more tourists visited the city. Hong Kong retail spending plunges to 17-year-low as visitors decline and yuan weakens They expect the celebrations as well as China’s worsening relations with South Korea to bring more mainland travellers to Hong Kong. “We expect to see some improvements in the second half of the year,” said Thomson Cheng Wai-hung, chairman of the Retail Management Association. But he anticipated the industry would not see a rebound in figures until next year. The industry veteran said the scale of the official celebrations by the Hong Kong Tourism Board would catch the attention of international visitors. Local retailers were also seeking ways to capitalise on the opportunity by jointly launching promotional campaigns. Besides, Beijing’s recent move to discourage group tours to South Korea in retaliation for the deployment of a US missile defence system there could also prompt mainland tourists to choose Hong Kong over South Korea during the three-day Ching Ming tomb-sweeping festival in April, he said. Despite optimism by industry figures, the decline in February sales widened from January, when most shoppers splashed out before Lunar New Year . The February figure was down 5.7 per cent year-on-year from the revised 1 per cent decline in January , marking the industry’s 24th monthly contraction. We expect to see some improvements in the second half of the year Thomson Cheng Wai-hung, Retail Management Association Although the number of visitors to the city rose 1.4 per cent over the two months, retailers did not see a boost in business, which Cheng attributed to their declining spending power. Per capita spending by overnight visitors fell from HK$7,234 in 2015 to HK$6,602 last year. The Tourism Board is predicting a further 5.2 per cent decline to HK$6,256 this year. Sales of jewellery, watches and other luxury items – products usually popular with mainland visitors – dipped 1.2 per cent in the first two months. Clothing sales fell by 6.9 per cent and consumer durables by 15.3 per cent. But a few categories showed resilience. Sales of medicine and cosmetics increased 2.7 per cent in the first two months while food, alcoholic drinks and tobacco were up 1.4 per cent. Tourist numbers dip 4.5 per cent for 2016 in biggest fall since Sars hit Hong Kong in 2003 “[The] performance of retail sales was still constrained by the lack of growth in tourist spending despite the modest recovery of visitor arrivals in recent months,” a government spokesman said. “Looking ahead, the performance of retail sales will depend on the recovery pace of inbound tourism as well as whether consumer sentiment will be affected by the various external uncertainties,” he said.