Macau’s economy to contract by 5.9% in 2016, EIU says

19 September 2016

The fall in Macau’s gaming services exports is expected to reach its lowest point this year, and the economy as a whole will contract 5.9%, in real terms, according to the Economist intelligent Unit (EIU).

The growth rate of gross domestic product (GDP) in 2017 will reverse the downward trend registered since 2014, the year in which the economy contracted by 0.4%, with the EIU estimating an increase of more than 11 percentage points over the current year to 5.3%.

Most of the indicators included in the forecast summary will remain virtually unchanged, with the exceptions of gross fixed capital formation or investment, which is expected to improve from minus 19.7% this year to minus 3.3% in 2017 and government budget balance as a percentage of GDP, which will continue on the downward trend seen since 2014 to 7%.

In 2016 and 2017 new tourist and gambling facilities are due to open in the Cotai area, a landfill located between the islands of Coloane and Taipa, with no news of further projects of the size of those already opened, after 2017.

Last Tuesday, for example, the Sands China group opened the “Parisian” complex, an investment of US$2.9 billion, which includes a replica of the Eiffel Tower at half the height of the original, 3,000 rooms, 150 stores, ten restaurants and a casino with 410 gaming tables and 1,600 slot machines.

In the report issued on Macau, the EIU says that the “most dramatic” effects of the anti-corruption campaign launched by the Chinese government have been overcome, and in August the amount of gross revenue reversed the year on year downward trend that occurred for 26 consecutive months.

Overcoming the “darkest period,” according to the EIU, will allow the Macau economy to return to growth and record a year on year decline of just 5.9%, despite a contraction of 10.3% recorded in the first half.

Finally, public expenditure will continue to grow, remaining robust in 2016/2017, in that the government will tend to spend more to act as a buffer to the economic downturn. (macauhub/MO)