Hong Kong retail sales grow 16.2% in 2023, bouncing back from contraction
- Provisional figures released by Census and Statistics Department show retail sales in December rose 7.8 per cent year on year
- December’s growth marked 13th consecutive month of improved retail sales over 2022 figures
Hong Kong’s retail sales grew 16.2 per cent last year, rebounding from a small contraction in 2022, but analysts warned that the city’s weakened economy would continue to affect consumer sentiment.
Provisional figures released by the Census and Statistics Department on Thursday showed retail sales in December rose 7.8 per cent year on year, hitting HK$36.3 billion (US$4.7 billion), slightly higher than the HK$34.2 billion logged the previous month.
December’s growth marked the 13th consecutive month of improved retail sales over the figures in 2022.
Hong Kong economy grows less-than-expected 3.2% in 2023
The return to growth followed a 0.8 per cent year-on-year contraction in 2022.
The value of retail sales for the whole of last year was provisionally estimated at HK$406.7 billion, an increase of 16.2 per cent over 2022.
“Looking ahead, visitor arrivals should increase further alongside the continued recovery of handling capacity,” a government spokesman said.
“Rising household income also bodes well for local consumption. These factors, coupled with the government’s efforts to promote mega events and launch various activities including ‘Day x Night Vibes @ 18 Districts’, should provide support to retail businesses.”
Retail sales last December surged by 50.1 per cent over the same month in 2022 for jewellery, watches and clocks, and valuable gifts, followed by other consumer goods, apparel, commodities in department stores, and medicines and cosmetics.
Taking into account seasonal factors, retail sales decreased by 3.3 per cent in the fourth quarter compared with the previous three months, the department said.
Hong Kong tourism numbers forecast to return to pre-Covid level by end-2025
The Hong Kong Retail Management Association said the momentum of tourism-related retail categories had slowed compared with previous months.
The association added the weak economy and stock market had also hit consumer spending.
“Despite the upcoming Lunar New Year in February, which should typically bring about a shopping frenzy by the end of January, we have not yet seen a noticeable surge in Lunar New Year shopping,” Annie Tse Yau On-yee, the association chairwoman, said.
The association said expected retail sales to show a single digit to low double digit decline in the first half of the year because of a trend among residents to travel across the border, combined with a strong Hong Kong dollar.
“Our industry will focus on strengthening experiential shopping elements to enhance our competitiveness and showcase the city’s uniqueness,” the body’s executive director Bond Law said.
“We also believe that joint efforts are needed,” he said. “Government support is also needed to lead the cross-sectoral collaboration among different stakeholders, such as tourism, transport and the catering industry to create synergy.”
Gary Ng Cheuk-yan, a senior economist at Natixis Corporate and Investment Bank, said the city’s retail sector was still struggling to find its way out of structural challenges.
“Outbound tourism will only grow more, and it is hard to expect tourism spending to recover at the same pace. As the cyclical momentum is exhausted, Hong Kong retail sales growth may decelerate from 16 per cent in 2023 to 2 per cent in 2024,” Ng said.
Hong Kong welcomed 33.9 million visitors last year, about 55 per cent of the average across 2017 and 2018.
The city’s economy rebounded last year, with its gross domestic product increasing by 3.2 per cent over 2022. For the whole of 2023, private consumption surged 7.4 per cent year on year.
Hong Kong’s post-pandemic recovery has been gradual because of weak global demand, escalating geopolitical tensions and the sluggish mainland China economy.
The city’s exports plunged 7.8 per cent last year compared with 2022, even after a rebound in growth in the fourth quarter following a prolonged contraction.
Retail sales in Hong Kong registered three periods of contraction within the last five years.
The city recorded growth of 8.1 per cent in retail sales on 2021, a significant improvement compared with contractions of 24.3 per cent in 2020 and 11.1 per cent in 2019.
