China's retail sector to see slow recovery as it reopens from pandemic: Fitch

China's retail sector to see slow recovery as it reopens from pandemic: Fitch

Labor shortage, weak consumer confidence, logistics disruptions among reasons, according to rating agency

By Ovunc Kutlu

ISTANBUL (AA) - China’s retail sector is expected to show a slow recovery during its reopening phase from the pandemic, Fitch Ratings said Thursday.

Retail sales are expected to "stay muted" during the initial phase of reopening due to an anticipated sharp increase in the number of COVID-19 cases, possible labor shortages in the retail workforce and weak consumer confidence in employment and income prospects, the rating agency said in a statement.

"We expect retail sales growth to remain sluggish in the near term as COVID-19 spreads rapidly, discouraging outdoor shopping. Spiraling confirmed case numbers in the past few weeks have also dampened labor productivity and caused widespread disruptions in manufacturing supply chains," the statement said.

Online retail sales, in addition, are anticipated to also be affected due to logistics disruptions, according to Fitch.

Shoppers are expected to refrain from making online purchases to avoid delivery couriers or tainted packages, while rising infections among couriers have resulted in cancelled orders and backlogs in distribution, it added.

Fitch said China's retail sales volume contracted 5.9% in November compared to the same month last year, while the unemployment rate remained high at 5.7% in November, up from 5% a year earlier.

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