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“Retail sales growth is expected to remain sluggish in the near term as COVID-19 spreads rapidly, discouraging outdoor shopping. Spiralling confirmed case numbers in the past few weeks have also dampened labour productivity and caused widespread disruptions in manufacturing supply chains,” according to a non-rating action commentary by Fitch Ratings.
China’s easing of pandemic control measures is projected to revive retail sales in 2023, as per Fitch Ratings. However, the recovery trajectory is likely to be sluggish during the initial phase of reopening, due to a sharp rise in COVID-19 cases, increased absenteeism in the retail workforce, and weak consumer confidence in employment and income prospects.
Online retail sales will also be impacted as a result of logistics disruptions and shoppers refraining from online purchases to avoid delivery couriers or tainted packages. An increase in infections among express-delivery couriers has led to cancelled orders and backlogs at sorting centres and distribution outlets.
China’s total retail sales dropped -5.9 per cent year-on-year (YoY) in November 2022 (-0.5 per cent YoY in October 2022), with 11M22 total retail sales growth of -0.1 per cent YoY.
“The pace of retail sales recovery is expected to remain uncertain, subject to the extent of pandemic-related productivity disruptions and improvements in sentiment and employment,” added Fitch.
Fibre2Fashion News Desk (NB)
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