By Donny Kwok and Twinnie Siu
HONG KONG, Nov 1 (Reuters) - Hong Kong's retail sales plunged in September as the anti-government protests that have gripped the Chinese-ruled city for nearly five months scared off tourists and battered spending.
Since June, protesters have taken to the streets of the Asian financial hub in sometimes violent demonstrations in response to perceived Chinese meddling with the city's promised freedoms.
Already hampered by the Sino-U.S. trade war and a slowing Chinese economy, the protests have further damaged the city's economy, hitting retail and tourism particularly hard.
Retail sales in September fell 18.3% from a year earlier, government data showed on Friday.
The slide compared with a revised 22.9% drop in August and a 21.5% fall in September 1998, according to Refinitiv data, as clashes spread across shopping districts and took a heavy toll on malls.
Tourist numbers fell about 50% in the first half of October, Chief Executive Carrie Lam said on Wednesday.
"The continuing unrest has crippled our retail trade, as well as catering, transport and numerous other businesses associated with the tourism industry," Lam said.
Retailers from prime shopping malls to family-run businesses have been forced by the protests to close on multiple occasions.
Retail sales fell for an eighth consecutive month to HK$29.9 billion ($3.81 billion) in September. They were down 20.4% in volume, compared with a revised 25.2% drop in August.
For the third quarter as a whole, retail sales volume fell by 19.5% year-on-year, almost on par with the record decline in the third quarter of 1998, the government said.
"As protests involving violence continue to deter tourists and reduce local consumption, and the subdued economic outlook also dampens consumer sentiment, the performance of retail sales is likely to stay weak in the near term," a government spokesman said.
For first nine months, total retail sales fell 7.3% in value and 8.3% in volume.
Figures on Thursday showed that Hong Kong slid into recession in the third quarter, for the first time since the global financial crisis. Lam has warned that full-year growth is likely to contract.
Analysts say a weak Chinese yuan has also translated into lower spending. Luxury goods have been hit particularly hard, with brands from Prada to Cartier counting the cost to their businesses.
Hong Kong is one of the world's top five luxury destinations and has long been a magnet for brands attracted by the flow of visitors from mainland China. Visitors from across the border typically make up around 80% of the city's overall tourists. Their numbers decline 35% in September. (https://bit.ly/36oJIIn)
In September, sales of jewellery, watches, clocks and valuable gifts dropped 40.8%, compared with a revised 47.1% drop in August.
Several retailers have been forced to shut operations, including Chinese fashion retailer EPO, which said last week it had closed all 14 stores in Hong Kong because of the social and economic conditions.
($1 = 7.8381 Hong Kong dollars)
(Reporting by Donny Kwok and Twinnie Siu; Editing by Farah Master and Sam Holmes)
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