European financial crisis has “small impact” in Macau

2013-4-11

From：Macau Daily Times

Mr Oliver Landman, the Chair of Economic Theory and Director of the Institute for Economic Research at the University of Freiburg, Germany has advised Macau Daily Times, “The current financial crisis in Europe has small impact in Macau. As the major industry of the region’s economy is the casino business that mainly depends on costumers coming from mainland China, the territory can at most be affected very indirectly by European affairs.”
The macroeconomist was yesterday at the Macau Polytechnic Institute conducting an academic seminar titled “Financial Integration and Macroeconomic Imbalances: Experiences of Europe and Asia”.
Mr Landmann noted that “For all the countries depending on the European market as an important exporting destination, economic stagnation due to the current financial crisis is becoming a major problem.” At this point the international investment community is  concerned about Europe, “because a great number of governments are facing hard times in straightening their debts and a government considered a safe investment a few years ago is no longer a guarantee”.
“Even deposits in European banks have become questionable as the example of Cyprus has shown us, where foreign investors who thought they had a very safe haven for their funds all of a sudden faced major losses due to the way the crisis is being undertaken”, emphasized the economist.
In comparing Europe to other major countries – like the United States and China — Landmann highlighted that most economies have recovered “very well” from the financial crisis; however Europe showed a “very divided picture”.
The northern part of Germany and the surrounding countries have recovered from the crisis “because they are strong in export markets in emerging economies, and because their financial sector is not so heavily affected.” The southern and the eastern countries such as Greece, Spain, Portugal, Ireland, Cyprus, are struggling to come out from the financial crisis and at the same time are facing harsh austerity policies “which push their economies further down”. To the macroeconomist, banking union are the magic words.
“To solve these major problems, Europe has to integrate key functions in the management of the financial industry, that is to say bank regulation, supervision, deposit insurance for depositors including the fiscal backstops that such deposit insurance requires”.
Concerning China’s expectations; “even though the recovery of Europe is not vital, certainly China has an interest in its fast recovery, because Europe represents a major market for the Chinese exports and is a great supplier of investment goods,” explained the German scholar.

Copyright@Macau Daily Times