March 2, 2020 / 2:02 PM / a month ago

Hong Kong January retail sales fall for 12th month due to coronavirus

HONG KONG (Reuters) - Hong Kong’s retail sales fell for the 12th consecutive month in January, weighed down by a coronavirus outbreak following months of often violent anti-government demonstrations.

FILE PHOTO: Shoppers cross the road outside Causeway Bay shopping mall in Hong Kong, China, December 26, 2019. REUTERS/Lucy Nicholson/File Photo

Since Hong Kong recorded its first coronavirus patient in January, tourist arrivals have slowed to a trickle and shopping malls and restaurants have been largely deserted as residents have stayed indoors.

Retail sales in January fell 21.4% from a year earlier to HK$37.8 billion ($4.86 billion), compared with a revised 19.4% drop in December, government data showed on Monday.

In volume terms, retail sales fell 23.0%, compared with a revised 21.1% drop in December.

Analysts say retail conditions worsened in February when more cases were reported. The health scare came when the Chinese-ruled city was already grappling with its worst recession in a decade.

Hong Kong, which relies heavily on spending by mainland China visitors, has taken measures to reduce the flow of people crossing the border and is also subject to travel restrictions by other governments.

“The business environment of retail trade has turned even more austere lately, as the threat of (the coronavirus) has brought inbound tourism almost to a standstill and caused severe disruptions to consumption-related activities,” a government spokesman said.

Hong Kong unveiled a record budget deficit on Wednesday, pledging cash handouts to residents and business tax breaks.

TOURISM HIT

Tourist arrivals in Hong Kong plunged 52.7% year-on-year in January, compared with a 51.5% plunge in December and a 55.9% fall in November, which was the steepest fall since May 2003 - when the city was hit by an outbreak of the Severe Acute Respiratory Syndrome (SARS) epidemic. (bit.ly/2wjlfa0)

January tourist arrivals fell to 3.2 million, according to the Hong Kong Tourism Board (HKTB). The number of mainland visitors fell 54.2% in January to 2.5 million.

Tourist arrivals in the city in February fell to under 3,000 a day on average, from around 100,000 in January, which was already less than half the traffic from January 2019, HKTB said.

Sales of jewelry, watches, clocks and valuable gifts, which rely heavily on mainland tourists, plunged 41.6% on-year in January, compared with a 36.6% drop in December. Medicines and cosmetics fell 32.3%, while department store sales dropped 27%.

The Hong Kong Retail Management Association said it had entered “a super-cold winter” threatening its survival and some shops have been on strike, hoping to convince landlords to lower rents until the city comes back to normal.

Reporting by Donny Kwok and Twinnie Siu; Editing by Marius Zaharia and Andrew Cawthorne

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