Retail sales in Hong Kong increased in January for the second consecutive month on improved consumer sentiment.

Further easing of pandemic restrictions will also give sales an additional boost, according to the government on Thursday.

January’s retail sales rose 7% compared to the previous year in value terms to reach HK$36.2 billion ($4.61 billion). This is a rise from December’s HK$33.7 billion when retail sales were revised to a 1.2% increase from the year before.

The strict Covid restrictions have weighed on the economy since the beginning of 2020, yet Hong Kong stopped its mask mandate earlier this week in a bid to attract visitors to the city and get back to normal.

Reuters reports that the government has also launched a promotional campaign entitled “Hello Hong Kong” to see the return of tourists and businesses.

“The continued return of economic activities to normalcy and further rebound in the number of visitor arrivals will benefit the retail sector,” said a government spokesperson, going on to say that enhanced labour market conditions will provide support.

In terms of volume, retail sales in January rose 5.1% from the previous year, compared to a 0.6% decline in December. January’s figure was the highest since April last year, when retail sales and volume rose 11.7% and 8%, respectively.

Hong Kong’s economy is forecast to grow between 3.5% and 5.5% in 2023 after contracting 3.5% in 2022.

Furthermore, January’s tourist arrivals in Hong Kong were almost 70 times as high as last year, to 498,689. This compared to around 16 times growth in December to 160,578.

Hong Kong’s seasonally adjusted unemployment rate edged down to 3.4% between November and January from 3.5% between October and December, the Reuters report adds.