(Bloomberg) -- Hong Kong's retail sales contracted 14.6% in February from a year ago, the biggest decline since July 2020 as the government imposed tough restrictions to battle the city's worst-ever Covid outbreak.
The fall in sales value -- the first for the city since January 2021 -- was even worse than the median estimate of a 7.7% decline expected by economists in a Bloomberg survey.
The volume of sales dropped 17.6% from a year prior, slightly better than the 19% fall expected by economists.
The data released Thursday by the city's Census and Statistics Department likely does not capture the entire impact from the recent Covid curbs, as it covers consumer spending on goods but not services such as catering, medical care and entertainment, which account for over 50% of total consumer spending.
Retail sales also tend to show greater volatility in the first two months of the year due to the Lunar New Year, the department said in a statement accompanying the data.
“While the local epidemic has shown signs of easing of late, the retail sector will continue to face notable pressure in the near term,” the statement quoted a government spokesperson as saying.
Omicron's surge in the city, along with the ensuing restrictions, has hit businesses and threatened growth. A contraction in gross domestic product in the first quarter of 2021 could be as deep as 4% from a year ago, according to Eric Zhu of Bloomberg Economics. The business community has also called on the city to give it more of a say in the government's Covid strategy.
Relief is on the horizon. Chief Executive Carrie Lam has laid out a plan to ease Hong Kong's social-distancing rules in phases, starting from April 21. Restaurants will be allowed to reopen dinner service and let as many as four people dine together, up from the current two. Other venues including gyms will also resume service.
The government will also start handing out consumption vouchers in April. Last year's handouts helped boost monthly retail sales by double digits.
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