Accounting firm PricewaterhouseCoopers on Thursday said it expects retail sales in Hong Kong to reach HK$428 billion this year, up 5 percent year-on-year.

At a press conference, the firm's consumer markets leader, Michael Cheung, said that while they predict the city’s retail sales to grow only 2.4 percent in the first half of the year, growth momentum will pick up in the second half and rise to 8.4 percent.

This will be due to expected improvements in the global economy, potential interest rate cuts, as well as an easing trend of Hongkongers heading north for shopping.

“The behaviour of Hongkongers heading north was purely because of the price differential between Hong Kong and the mainland, especially the weakening of the renminbi against the Hong Kong dollar and the US dollar,” Cheung said, explaining that the gap may narrow when the mainland’s economy recovers further and when the US starts to reduce interest rates.

“Once the price differential gap is narrowed, then Hong Kong people may need to think about whether they need to go north that often,” Cheung said.

The firm said it expects department store products, medicines and cosmetics as well as luxury items to remain the key drivers of retail sales growth, rising between 10 and 20 percent in 2024 year-on-year.

Cheung also said that Kai Tak will become the city’s next key shopping and activities area so the authorities should promote it as a main tourist district, while holding more financial and cultural mega events to spur growth.

Separately, Cindy Ngan, a partner in the climate and sustainability practice of PwC Hong Kong, said new retail opportunities could arise from the government's planned waste-charging scheme.

“While such policies could add increased costs for some retailers in the short term, forward-looking businesses will take this opportunity to seek revolutionary changes to explore new business models as well as products’ long-term sustainability,” Ngan said.

“The circular economy in the city will be a new trend,” she added.

The firm said, however, that the city’s retail landscape is undergoing a structural change, and a full recovery to the peak level seen in 2018 may take another three to five years.