In the Hong Kong retail sector, economists say not to expect a return of “revenge spending”. This Lunar Year Holiday and the reopening of the city’s border with the mainland have low footfalls.
Economists have predicted an elevation of 10% to 15% of retail sales in the first quarter of this year as compared to 2022 when the city was fighting against the fifth wave of the coronavirus pandemic.
In recent weeks, it has been seen that more people are leaving Hong Kong than arriving. The immigration data showed a net outflow of 395,619 people between January 8 and Tuesday when quarantine-free travel with the mainland started again.
According to official data, from January 18 to Tuesday, 793,823 people departed Hong Kong, compared with 455853 who entered, most of whom were residents.
On Sunday, the first day of the Year of Rabbit Hong Kong welcomed 10,082 visitors from the mainland, 54% of the total number of arriving non-residents. However, the numbers are lower than the daily average from the last week which stood around 12,962.
With an expected surge in demand over the holiday, the limit of 50,000 on all four checkpoints was increased to 65000. Security over the border should ensure that people are showing negative PCR (Polymerase chain reaction) tests taken within 48 hours of departure.
Unfortunately, the city logged 2295 new Covid-19 cases on Wednesday out of 2,864,607 people traveling. Out of these, 27 reported deaths are also recorded with a total of 13,230.
Sun Hung Kai Properties executive director Maureen Fung Sau-Yim, who manages 15 of the group’s malls in Hong Kong, said her portfolio saw an increase by 25% and sales went up by 30% between January 19 and Wednesday from a year ago.
She added, residents accounted for 90% of the shopper traffic and mainland visitors made up the remaining 10%. “Some local people shopped for skiing gear, down jackets, and new apparel before traveling. We expect more mainland tourists will come back.”
Gary Ng Cheuk-Yan a senior economist with Natixis Corporate and Investment Bank, said that the quarantine-free travel to mainland gates has not created any major impact on the retail industry, still, most spending is coming from residents only.
He expected a 15% growth in the retail sector for the first quarter as compared to the previous year. However, he warned that there would be no benefits to a “sudden revenge spending story” and the government can expect retail growth by the second quarter of this year.
“The real improvement will come from the third quarter, because it will take time for tourists to come back to Hong Kong, and then we will have to see whether people get used to this high-interest rate environment,” Ng said.
Simon Lee Siu-po, co-directors of the International Business and Chineses Enterprise Programme at Chinese University, has put a similar percentage as Ng which is 15% expected growth in retail sales, but again PCR is one of the hurdles that restrict tourists from entering Hong Kong.
The weak Chinese yuan has created a situation of inflation by putting demanded products at expensive rates hence people are shifting from the Hong Kong market to online platforms from Japan and South Korea.
“Tourists will gradually come back only after Lunar New Year, but with no silver bullet effect on retail sales as they can buy online or buy from agents with Hong Kong products being expensive,” Lee said.
Many other economic experts such as Terence Chong Tai-Leung have put their point of view on retail sales improvement in Hong Kong.
Retail Sector Lawmakers Peter Shiu Ka-fai urged the government to handle the market with care and they should hand out consumption vouchers to support Hong Kong residents. We can’t expect tourists to return in the first half of the year.
He did not set the target for the vouchers saying an amount ranging from HK$3000 to HK$10000 would be acceptable. He added, “ Tourists will not come immediately, the economy has been weak for three years.”
Legislator Doreen Kong Yuk-Foon denied the idea of a voucher for international consumption. On the contrary, he supported that the city should rely on tourists to boost the economy after the pandemic.
Due to the Covid-19 pandemic, the city is still suffering with a downgraded full-year economic forecast for 2022. The 0.5% growth and 0.5% contraction to a 3.2% drop amid a recession, cites a deteriorating external environment.
The GDP fell by 4.5% in the third quarter of last year from 2021, following a 1.3% decline in the previous three months.
- Published By Team Hongkong Journalist