Macau will end 2019 with an economic contraction of 0.3%, contrary to the previous forecast for GDP growth of 3.2% in 2019, according to a forecast from the Economist Intelligence Unit (EIU) released on Friday.
One of the reasons given by the EIU for the expected GDP contraction in 2019 is that during the current year the Macau government did not invest heavily in public works and no new casino or resort is planned.
The EIU noted, however, that Macau’s economy is expected to grow again by 1.6% in 2020 when new public works projects are expected to begin, notably in the social housing, transport and infrastructure sectors. Previously the EIU pointed to a growth of Macau’s economy of 3.8% in 2020 which it has now reduced.
The EIU’s analysis considers, however, that new projects including the new landfill zone near the Hong Kong-Zhuhai-Macau bridge terminal, the future hospital in Cotai and the start-up of surface light rail operations in Taipa, will not bring substantial changes to the Macau GDP by the end of 2020.
The document also noted that investment in 2019 will fall by 28.9%, which is well above previous forecasts, which suggested a drop of 4.1%.
The report also points out that China’s economic growth will have an impact on Macau’s economy, particularly in Macau’s casinos, where tourists from the mainland will certainly bet less. The planned opening of the Grand Lisboa Palace by Sociedade de Jogos de Macau (SJM) in Cotai scheduled for early 2020 may help to mitigate the drop in Macau’s growth.
The EIU also noted that the six licenses of gaming operators that own casinos in Macau are expected to be renewed in 2022 but for a shorter period than the current 20 years and said it is convinced that no more gaming licenses will be awarded. (Macauhub)