Hong Kong retail eyes 5% growth in 2024

Recovery hinges on global economic stability and government policies.

Hong Kong’s retail sector saw an upturn in 2023 with a 16%increase in total retail sales, reaching HK$407b, fueled by the reopening of boundaries between Hong Kong and the Chinese mainland.

Michael Cheng, Asia Pacific, Mainland China, and Hong Kong Consumer Markets Leader for PwC, said that this resurgence was characterised by a wave of 'revenge travelling' and shopping behaviours that contributed significantly to the retail and overall economic uplift.

"The opening of the bank helped the Hong Kong retail sector considerably in the first half of 2023," Cheng noted, underscoring the role of cross-border dynamics in the retail sector's recovery.

However, despite the promising start in 2023, the global economic landscape, particularly the uncertainty surrounding the easing of interest rates in the US, continues to cast a shadow over the retail market's prospects. 

The strong US dollar, pegged to the Hong Kong dollar, alongside a weaker renminbi, has dampened the influx and spending power of tourists from China, traditionally a significant contributor to Hong Kong's retail industry.

PwC's forecast for the retail sector in 2024 reflects a cautious optimism, with an anticipated 5% year-on-year increase in total sales to HK $428b. This growth, however, is expected to be uneven, with the first half of the year projected to see modest gains, and a more robust recovery anticipated in the latter half.

The Hong Kong government's efforts to stimulate the retail sector and attract tourists have been notable, including the introduction of policies aimed at enhancing the city's 'night economy' and hosting global entertainment events. 

Cheng emphasised the importance of adaptability for retailers in navigating the complex and evolving market conditions. "Retailers need to be proactive and equipped with the necessary knowledge and strategies to succeed," he advised.