MSAR records first GDP decline for 5 years

2014/12/2

From：Macau Business Daily

It had to happen, and it has. Macau’s GDP declined 2.1 percent y-o-y in Q3. The first time in five years the SAR has reported an economic contraction.

It hasn’t happened quite without warning. In May, as many as four international institutions and rating agencies urged Macau to diversify its economy. A warning that seems to have fallen on deaf ears with gaming revenues dropping steadily for the past five consecutive months, and now a slowdown in the territory’s gross domestic product (GDP) – the first quarterly growth that has been below zero for the last five years.
The latest official figures released by the Statistics and Census Service (DSEC) reveal that Macau’s GDP for the third quarter of the year decreased by 2.1 per cent year-on-year in real terms. According to the report, the ‘sluggish service trade is the leading cause of the downturn,’ the statistics bureau says.
Figures show that exports of gaming services dropped 12.3 per cent in real growth during the third quarter of the year, leading to the current economic downturn. In addition, exports of ‘other tourism services’ also dropped 0.7 per cent, despite the increasing number of visitor arrivals in the same quarter.
Of the major components of Macau’s GDP are private investment, which increased by 41.5 per cent, government final consumption expenditure, which also increased 8.1 percent and private consumption expenditure, which increased 7.2 percent.
In addition, expanding investment lessened the magnitude of the territory’s economic contraction. ‘Gross fixed capital formation, the gauge of investment, continued to expand and rise by 38.1 per cent year-on-year,’ the report reads, adding that with the number of large-scale tourism development projects underway, private investment saw a 41.5 per cent growth. Of this, investment in construction increased by 43.8 per cent, while investment in equipment increased 28.9 per cent.
Government investment increased 5 per cent, with investment in public construction expanding 15 per cent, but that of equipment shrinking 34.7 per cent.
Meanwhile, government final consumption expenditure increased 8.1 per cent in the third quarter of the year over that of the same period a year earlier, while compensation of employees rose 2.6 per cent and net purchases of goods and services increased by 14.2 per cent.
Overall, imports of goods and services decreased by 2.5 per cent, with imports of services decreasing 17.8 per cent, while overall exports of goods and services dropped 9.3 percent, with exports of services alone decreasing 9.9 per cent.
‘The decline in exports of gaming services deteriorated, slowing further by 12.3 per cent year-on-year, albeit the increase in visitor arrivals and lower visitor spending resulted in a 0.7 per cent decrease in exports of other tourism services,’ the statistics report on the third quarter GDP reads.
The private sector, however, witnessed consumption expenditure, with full employment of the labour force and soaring manpower needs being conducive to a yearly 7.2 per cent increase in private consumption expenditure in the third quarter. In addition, household final consumption expenditure increased by 6.7 per cent in the domestic market and another 10.6 per cent in the market abroad, official data shows.
Also, with external demand, merchandise exports grew 11.4 per cent year-on-year, while merchandise imports expanded by 12.4 per cent in the third quarter of the year.

Copyright@Macau Business Daily