Local economy is on the way to grow by almost 50 percent in 2023
Macau’s economy returned to growth in the first quarter of this year, with gross domestic product (GDP) rising 38.8 percent year-on-year.
According to the Directorate of Statistics and Censuses (DSEC), the “ease of entry restrictions in Macau, the full resumption of travel between Hong Kong and Macau, and the resumption of group travel from the mainland of China” were pointed out. as factors that allowed this considerable recovery.
On February 6, China lifted all restrictions due to the covid-19 pandemic on travel to Hong Kong and Macau, allowing the resumption of organized tours to the two cities.
According to the authorities, the economy has recovered steadily, despite a portion of private consumption spending having been transferred to government spending through the living subsidy.
This, together with other factors such as the drop in population and the resumption of travel by residents abroad after the pandemic, led to a decrease of 12.1 percent in the final consumption expenditure of families in the local market, in annual terms. .
Meanwhile, the final consumption expenditure of families abroad rose 53 percent, with private consumption expenditure falling 7.5 percent.
Previously, the Macau Economic Association even pointed out that the second quarter could see annual GDP growth of more than 90 percent year on year.
These values would represent that the local economy would have managed to reach 50/60 percent of pre-pandemic levels, but it is necessary to take into account a very low base of comparison, after the impact caused by the pandemic last year.
While acknowledging that the external situation remains complex, with geopolitical tensions, OPEC production cuts, high inflation and high interest rates posing challenges to financial stability, the association stressed that the positive impact of economic policy on the Chinese mainland is is becoming more and more apparent.
With the first Ching Ming Festival and the Easter holiday after the resumption of cross-border travel, Macao’s domestic and foreign tourism has seen a significant increase.
Daily tourist arrivals over the six-day holiday reached 80,000, a figure that should see the local hotel occupancy rate recover to at least 80 percent.
At the same time, the unemployment rate for local residents continued to fall in the February-April period, reaching 3.6 percent.
Macao’s resident workforce totaled 371,200 people from February to April. Total employment was 360,700 and the number of employed residents totaled 282,200, an increase of 1,400 and 1,000 respectively over the previous period.
In March of this year, the financial rating agency Fitch predicted that Macau’s economy could recover by 48 percent this year, with casino turnover reaching half of pre-pandemic levels.
Last year, Macau’s GDP contracted by 26.8 percent, mainly due to a 51.4 percent drop to MOP42.2 billion in gaming revenue.
According to the agency, the removal of pandemic control measures, the resumption of visas for inland tourist excursions, as well as the decrease in labor shortages and capacity restrictions on the supply side, will significantly increase visitation numbers for 2023.
“Macau is well positioned to capture strong pent-up demand from mainland tourists, given its status as the only legal gaming tourism destination in Greater China and its geographical proximity to the mainland. A faster-than-expected return of visitors poses a positive risk to the recovery outlook,” the agency highlighted.
Regarding the budget deficit of the Macao SAR, in March Fitch Ratings believed that the Macao SAR would register a decrease in 2023 to 10.5 percent of the Gross Domestic Product.
The figure represents an improvement in spending compared to last year, when the deficit was 35.5 percent of GDP.
“We believe that the strength of Macao’s public finances remains practically intact, despite the deficit record for the fourth consecutive year”, it was considered. “The reduction in the deficit for this year will reflect the increase in gaming revenues and the impact of the relief from the lifting of measures related to the pandemic”.
However, the deficit is expected to remain the same for five years, until 2024, when Fitch Ratings believes it will be 1.9 percent.
Despite the deficit, the agency maintained the ‘rating’ of Macau at ‘AA’, the third highest level on the agency’s scale, underlining that it is the only jurisdiction in the world without any external debt, in addition to having a financial reserve in the value of 559.2 billion patacas.
Even so, in a dispatch issued to all government departments this week, the Chief Executive of Macau, Ho Iat Seng, highlighted the importance of taking into account whether budgetary expenditures are “mandatory” and “reasonable”.
The Chief Executive urged the administration to be cautious in preparing the budget for the 2024 fiscal year, stating that Macau is still in full economic recovery.
