Hong Kong’s economic growth is slowing down.

The Hong Kong government has pointed to weakened exports as it reduced its growth estimate by one to three per cent.

At the same time, a slump in spending by visiting mainland shoppers hits the retail sector. According to the Hong Kong Tourism Board, the number of visitors from mainland China was 2.5 million in May compared with 2.6 million in April.

According to the government statement the HK$36 billion ($4.6 billion) retail-sales total for May makes a mere 8.8 per cent growth on an annual basis. This is the lowest level since September 2009 excluding holiday season peaks. The April figure was 11.4 per cent. A median estimate – according to a Bloomberg News survey among seven economists – was 9.4 per cent.

Cutting down on luxury good spending such as jewellery and watches is a key feature in this downturn. Government retail sales data shows the growth rate in sales of watches and jewellery in the year to May was 3.1 per cent – a fraction of the 61 per cent rate of the corresponding period in 2011.

Gambling is also down. Macau casinos are also hit by less willingness by Chinese visitors to spend. Estimates for June are below average, according to a report released last week. 

On a brighter note, the strengthening of the yuan means higher purchasing power for mainlanders on shopping tours to Hong Kong, where they enjoy lower tax rates on luxury goods. 

Retail sales in China for May shows a 13.8 per cent growth – the lowest since 2006 (excluding holiday season peaks), reflecting reduced inflation. 

The chairwoman of the Hong Kong Retail Management Association, Caroline Mak, draws a pessimistic outlook also about local consumption. A slowdown in sales of such goods as furniture sales shows that local residents are wary as well.

GB