Macau’s economy due to return to growth in 2017

20 June 2016

Macau’s economy is epxected to return to growth in 2017, when forecasts point to growth of 5.3 percent in real terms. This follows contractions of 0.9 percent in 2014, 20.3 percent in 2015 and a projection of 5.9 percent this year, according to the Economist Intelligence Unit (EIU).

Gross Fixed Capital Formation (GFCF), or investment, is expected to continue falling in 2017 – by 3.3 percent – which is an improvement on the -19.7 percent forecast for this year.

Investment has posted high levels of growth due to construction of large hotel and gaming projects. In 2014, for example, investment grew by 37.3 percent, and fell to 0.9 percent in 2015 and is posting negative growth this year.

Most of the large projects in the Cotai area have either been concluded or are in their concluding stages. This has direct effects on GFCF, which is also affected by lower public investment due to a drop in gross gaming and gambling revenues and resulting drop in tax revenues.

The EIU expects public spending as a percentage of gross domestic product (GDP) to continue contracting, although moderately. This year its projects growth of 12.2 percent and 10.8 percent in 2017. In 2014 and 2015 public spending increased by 25.1 percent and 14.1 percent, respectively.

The EIU analysts also noted in thelatest report on Macau that the balance of services would continue to post significant supluses in 2016/2017. (macauhub/MO)