Pro-democracy activists march in Hong Kong. Picture: PHILLIP FONG / AFP
Pro-democracy activists march in Hong Kong. Picture: PHILLIP FONG / AFP

Hong Kong — Retail sales, a key part of Hong Kong’s economy, felt a growing impact in June from mass protests, government data shows.

The government said June retail sales fell 6.7% from a year earlier, the biggest decline since February, as local consumer sentiment turned cautious and growth in visitor arrivals slowed.

Protests against a proposed extradition law began in late April and widened in June, though they remained peaceful until July, when there was violence at some demonstrations.

Businesses say the violence has added to the toll on tourism and the pivotal retailing industry.

Many businesses in Hong Kong are already facing strain from China’s economic slowdown, a weak Chinese yuan and fallout from the Sino-US trade war.

“The near-term performance of retail sales will likely remain subdued, as the weakened global and local economic outlook and other headwinds continue to weigh on consumption sentiment,” a government spokesman said after release of the June retail data.

“The recent mass demonstrations, if continued, would also dent the retail business further,” he said.

Retail sales fell to HK$35.2bn ($4.50bn), a fifth consecutive month of declines. May's decline was revised fractionally to 1.4%. For 2019's first half, retail sales fell 2.6% in value from a year earlier.

“The decline trend of the retail sales industry in the coming months will be more obvious, which may fall more than 10%,” said Angela Cheng, an economist at CMB International Capital. “We remain pessimistic about Hong Kong’s future retail business.”