Macau’s GDP expected to contract 24 pct in 2015, EIU says

24 June 2015

The Economist Intelligent Unit (EIU) has significantly increased its economic contraction forecast for the Macau economy this year to 24.0 percent, according to a report produced on 17 June.

In the previous report, produced five days before, on 12 June, for this year the EIU outlined a contraction of just 6.0 percent.

The EIU also increased its growth projection for the Macau economy in 2016 from 5.3 percent in 12 June report to 6.7 percent in the most recent report.

Gross fixed capital formation, or investment, also changed from one report to the next.

While on the 12 June the EIU predicted a contraction of 2.0 percent this year and an increase of 8.4 percent in 2016 report, the report produced five days later expects declines in both years – minus 3.7 percent this year and 24.2 percent in 2016.

The EIU’s inflation rate forecasts were also revised, increasing from 4.0 percent and 4.9 percent in 2015 and 2016, respectively, in the 12 June report, to 4.5 percent and 3.6 percent respectively, in the next report.

The EIU explained this significant review of Macau’s figures for 2016 were based on the continued anti-corruption campaign in China, which is having a significant effect on revenues from casinos, the main source of income in Macau, and is expected to continue next year.

However the EIU analysts expect an increase in casino revenues in the last few months of the year, albeit at a much lower level than previously, which explains the economic growth forecast for 2016.

The equally significant change in terms of gross fixed capital formation derives from an expected abrupt drop in private investment, as the hotel and casino complexes in the Cotai area of Macau are due to be completed. (macauhub/MO)