HONG KONG (Reuters) - Months of increasingly violent protests in Hong Kong are taking a growing toll on the city’s economy, weighing on confidence and scaring away tourists from one of the world’s most vibrant shopping destinations.

FILE PHOTO: A shopkeeper looks out from a closes door as protesters attend a march at an anti-parallel trading at Sheung Shui, a border town in Hong Kong, China July 13, 2019. REUTERS/Tyrone Siu/File Photo

Economists say the impact of anti-government protests over the past eight weeks is already worse than in 2014, when a so-called “Umbrella revolution” paralyzed the city’s financial district for 79 days.

Demonstrations are more spread out across the city this time and violence has been more intense, prompting local and foreign shoppers to avoid certain areas. Stores and even bank branches have been forced to close for prolonged periods.

Many businesses in the port city on the southern Chinese coast are already facing strains from China’s economic slowdown and fallout from the year-long Sino-U.S. trade war.

Various strikes are planned in coming weeks, while disruptive civil disobedience actions are taking place almost daily and look set to continue for months. On Tuesday, hundreds of protesters blocked train services, causing commuter chaos.

The main retail association has warned members expect a double-digit drop in sales in July and August. The government will release June sales data on Thursday.

“Hong Kong’s retail industry will be affected both internally and externally,” said Angela Cheng, economist at CMB International Capital Corporation Limited, adding she had revised her 2019 retail sales forecast to as much as a 10% drop, twice as deep as her previous estimate.

Brokerage CLSA downgraded local jeweler Chow Tai Fook, one of the city’s most popular brands with mainland tourists, to ‘sell’ from ‘outperform’ on July 23, saying the protests could cause permanent long-term damage.

Luxury group Richemont warned in July that protests hurt its sales, while Swiss watchmaker Swatch said political turbulence contributed to a double-digit decline in sales in Hong Kong, one of its most important markets globally.

Around the Admiralty district, where much of the protests have centered, staff at several restaurants and shops told Reuters on Monday that patrons have dropped by a third from a month earlier.

Slideshow ( 2 images )

BUSINESS AND MORALS

Bobby Tang, a 21-year-old sales representative at a Gucci store in the Causeway Bay shopping district, where protest barricades were raised for the first time on Sunday, supports the civil movement.

He says the government has failed to respond to any of its demands, which at first were focused on withdrawing a controversial China extradition bill, but have morphed into a much wider pro-democracy struggle.

But he also worries about his job at the French luxury group. Prior to the protests, the store had one client per minute, he said, but now it was 3-4 per hour and daily sales have fallen to HK$20,000 ($2,560) from HK$100,000.

“If the protests last until October, I worry if I can earn enough salary,” Tang said.

Shopping malls are often being used for rest breaks by protesters wearing helmets and goggles and sometimes carrying makeshift weapons.

The protesters have been largely respectful of the premises, but on one occasion one mall turned into a battle ground. As police tried to disperse crowds in the Sha Tin working class district on July 14, it ended up chasing them into a shopping center managed by Sun Hung Kai Properties.

Fighting erupted and scenes of regular shoppers with bulky bags running away while trying to maintain balance on bloody, slippery floors were broadcast worldwide.

Tourism, especially from mainland China, has dropped markedly. Britain, Japan, Singapore and others have issued travel alerts.

Hong Kong’s Federation of Trade Unions said hotel occupancy rates fell 20% in June year-on-year, and probably 40% in July.

A local tour manager who gave only his surname Yu said around two-thirds of his mainland clients have canceled bookings.

LONG-TERM RISKS

Fitch Ratings said in a note on Tuesday the unrest could damage business confidence and the quality of governance. It also raised longer-term concerns about policy paralysis and erosion of the rule of law.

A 1992 U.S.-Hong Kong Policy Act allowing Washington to have a different customs regime with Hong Kong than with mainland China was also crucial for the stability of the Chinese-ruled city.

For it to stand, U.S. authorities need to see Hong Kong as sufficiently independent from Beijing, therefore they will scrutinize the latter’s every step during the protests.

Fitch affirmed Hong Kong’s AA+ rating on June 11.

“Evidence of a permanent loss of confidence in public institutions or tangible reduction of the territory’s semi-autonomy as granted under the Basic Law, would ... be grounds to review the ratings,” Fitch said.

The American Chamber of Commerce warned that international businesses were feeling pessimistic on short-term prospects and that the government should take immediate actions to address the root causes of the demonstrations.

“The protests have a chance to last until the end of the year. We may even lose on Christmas, which should be the best sales season,” said Fung, a sales assistant for a skin care company who only gave her last name.