First single-digit expansion for Hong Kong retail in half year as growth hit by US-China trade war

July figure of 7.8 per cent is sharp slowdown from double-digit rises seen over last five months

PUBLISHED : Thursday, 30 August, 2018, 8:31pm
UPDATED : Thursday, 30 August, 2018, 9:56pm

Hong Kong’s retail industry has recorded its first single-digit expansion in half a year, the government revealed on Thursday, as growth slows amid economic uncertainties from the US-China trade war.

Shoppers spent HK$38.9 billion (US$4.96 billion) in July, up 7.8 per cent on the same month last year, official figures showed.

The slowdown followed the fifth consecutive month of double-digit growth in June, during which sales of goods in all categories increased.

The Hong Kong Retail Management Association said the figures were roughly expected, and that uncertainty surrounding the sector would drag on.

Chairman Thomson Cheng Wai-hung said escalating trade tensions between the world’s two largest economies had soured consumer sentiment among both locals and mainland Chinese tourists.

“The US-China trade war should continue for a long period,” Cheng said. “I personally think it cannot be resolved this year.”

He expected retail sales to hover around the 7 or 8 per cent mark in the second half. He forecast a full-year growth rate of about 10 per cent, depending on Christmas sales and whether trade tensions would ease after November’s midterm elections in the United States.

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Despite the slowdown, Cheng said July tourism numbers should be “ideal”.

Figures on the number of tourists travelling to Hong Kong in the month are not yet available, but Cheng said some of his association’s 9,000 member companies had told him per capita spending might not be so strong in July and August compared with the first half of the year.

The depreciation of the mainland Chinese currency, the yuan, against the Hong Kong dollar had also played a role in dampening growth, he added, as shoppers from across the border, who account for the lion’s share in Hong Kong, were getting less bang for their buck.

Another factor was the strong figures seen in July last year, which had made this year’s figures for that month weaker comparatively, he said.

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Cheng said retailers of watches and clocks, expensive medicinal herbs and dried seafood had felt the hit, but goods such as cosmetics should not have been significantly affected.

He forecast continued growth in tourism figures thanks to the scheduled opening of two large infrastructure projects – the cross-border express rail link to Guangzhou and the Hong Kong-Zhuhai-Macau bridge. Their positive impact would offset some of the negative effects of the trade war, he believed.

A government spokesman said officials expected favourable labour market conditions and sustained expansion in inbound tourism would continue to support retail sales performance in the near term.

But consumer sentiment might turn “less sanguine”, he added, if external uncertainties persisted or escalated.