Hong Kong February retail sales slip on weak tourist spending

Hong Kong's retail sales fell for the 24th straight month in February, hurt by a lack of growth in tourist spending as a strong local dollar hit tourism and business activity. Retail sales fell 5.7 percent from a year earlier to HK$34.8 billion ($4.48 billion) in value terms, after a revised 1.0 percent decline in January, government data showed on Thursday.
In volume terms, February sales dropped 6.1 percent on-year, compared with a 1.4 percent decline in January. "Looking ahead, the performance of retail sales will depend on the recovery pace of inbound tourism as well as whether consumer sentiment will be affected by the various external uncertainties," the Hong Kong government said in a statement.
Once a favourite shopping destination for mainland Chinese, tourists are now heading to other places, including Japan and South Korea which offer more affordable options for travellers. The Hong Kong dollar is pegged to the US currency, which means it is prone to strengthen when other Asian currencies weaken.
Tourist arrivals in January rose 4.8 percent from a year earlier, slowing from a 5.4 percent rise in December. Hong Kong's central bank had earlier in March raised its benchmark interest rate by a quarter point for the second time in three months, following a similar move by the US Federal Reserve. The Hong Kong Retail Management Association has estimated a 3-4 percent drop in retail sales in 2017, narrowing from an 8.1 percent drop in 2016. Sales of jewellery, watches, clocks and valuable gifts in Hong Kong rose 2.5 percent in value terms in February, against a revised 4.1 percent drop in January.