Hong Kong retail sales rise as economy recovers

HONG KONG Hong Kong retail sales increased in December as economic sentiment improved alongside further relaxation of social distancing measures, the government said on Friday.

Since early 2020, the strict COVID 19 restrictions have weighed on Hong Kong's economy, grinding tourism to a halt and battering sales at bars, restaurants and shops.

Hong Kong has cancelled all of its stringent COVID 19 rules and arrivals no longer need to do mandatory PCR tests, while the city's vaccine pass has been scrapped and quarantine-free travel with mainland China resumes.

Last week, the city's top leader John Lee said he aims to lift all COVID 19 restrictions this year.

A government spokesperson said that improved labour market conditions and an expected increase in inbound visitors should bode well for retail sales performance, as well as the return of economic activities from the epidemic to normalcy.

The Asian financial hub has been battered by its own Pandemic measures and spillover from China's zero-COVID policies, but recovering consumer spending on the mainland and a rebound in travel are expected to help the economy this year.

Hong Kong is facing risks from inflationary pressure and aggressive monetary tightening in advanced economies. Higher borrowing costs and a pessimistic outlook have hit asset prices, dragging private home prices down 15.6 per cent in the first annual drop since 2008, dragging 2022 private home prices down 15.6 per cent.

Retail sales in December decreased by 0.7 per cent from a year ago. That was compared to a 5.3 per cent fall in November.

The total retail sales value decreased by 0.9 per cent compared to the same period a year ago, and the volume was down 3.4 per cent for the whole of 2022.

In December, tourist arrivals increased by 16 times from a year ago to 160,578. For the year 2022, the arrivals increased 561.5 per cent from the previous year to 604,564.

The unemployment rate of the city was lowered to 3.5 per cent in the October to December period.

The data shows that sales of jewellery, watches, clocks and valuable gifts fell 3 per cent from a year ago, after a 8.3 per cent decline in November.

After a 15.4 per cent drop in November, sales of clothing, footwear and accessories grew 0.3 per cent.

In December, online retail sales increased 12.9 per cent year-on-year in value, compared to 9.4 per cent growth in November. They increased by 20.8 per cent for the whole of 2022.