Hong Kong retail sales will grow by just 10 percent to roughly HK$360 billion for the year, according to PwC’s latest estimate.
That is lower than the global accounting firm’s forecast in February of a 15 percent rise to HK$376 billion.
“The readjustment is because the anticipated border reopening between Hong Kong and the mainland in the fourth quarter is not likely to materialize and that the city’s retail sales are still primarily driven by local consumers,” said Michael Cheng, PwC Asia Pacific, mainland China and Hong Kong consumer markets leader.
Hong Kong is poised for a mild recovery due to a combination of internal factors, including an increasing vaccination rate, relaxation of social distancing measures, the electronic consumption voucher scheme, and the launch of the “Come2HK” and “Return2HK” quarantine-free schemes, he said.
However, the firm expects the voucher scheme will only give a moderate boost to retail sales, as most consumers are treating the voucher as a separate payment option rather than an incentive to increase spending on high-value items like luxuries.
It is estimated that 50 percent of the HK$35 billion derived from the program will go toward total retail sales this year.
Latest retail sales figures for the first seven months of the year showed they were up 7.6 percent. Jewelry and the luxury gifts saw the fastest growth, 32.7 percent, due to consumers’ “revenge spending” behavior, as well as a strong desire to acquire luxury branded items as a tool to hedge inflation and preserve wealth, PwC added.