Hong Kong retail sales rise in Dec, inbound tourism brightens outlook

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

December retail sales grew 1.1% from a year earlier in value terms to stand at HK$33.7 billion ($4.30 billion). That compared with HK$29.5 billion in November, when retail sales fell a revised 4.1% from a year earlier.

Strict Covid-19 restrictions have weighed on Hong Kong's economy since early 2020, grinding tourism to a halt and battering sales at bars, restaurants and shops.

Apart from the wearing of masks, which remains compulsory, Hong Kong has cancelled all 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 has been resumed.

Last week, the city's top leader John Lee said he aims to lift all Covid-19 restrictions this year.
"The return of economic activities from the epidemic to normalcy and an expected increase in inbound visitors should bode well for retail sales performance," a government spokesperson said, adding that improved labour market conditions were also lending support.

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.

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

In volume terms, retail sales in December decreased 0.7% from a year earlier. That compared with a 5.3% fall in November.

For the whole of 2022, the total retail sales value eased 0.9% as compared with the same period a year earlier, and the volume was down 3.4%.

Tourist arrivals in December soared about 16 times from a year earlier to 160,578. For 2022, the arrivals jumped 561.5% from the previous year to 604,564.

The city's seasonally adjusted unemployment rate eased to 3.5% in the October to December period.
In December, sales of jewellery, watches, clocks and valuable gifts, which before the pandemic relied heavily on tourists from the mainland, fell 3% from a year earlier, following a 8.3% decline in November, the data showed.
Sales of clothing, footwear and accessories in December grew 0.3% on the year after a 15.4% drop in November.

Online retail sales in December rose 12.9% year-on-year in value terms, compared with 9.4% growth in November. They jumped 20.8% for the whole of 2022.