Asia > Eastern Asia > Macau > Macau Outlook for 2013-14

Macau: Macau Outlook for 2013-14

2013/05/15

The country (Macau is situated in Eastern Asia, bordering the South China Sea and China.
Land in Macau is generally flat.
Chinese land covers an area of 28.2 square kilometers which is less than-sixth the size of Washington, DC
 
The climate is subtropical; marine with cool winters, warm summers.
Chinese speak Cantonese 87.9%, Hokkien 4.4%, Mandarin 1.6%, other Chinese dialects 3.1%, other 3% (2001 census).

Outlook for 2012-13

Fernando Chui was installed as Macau's chief executive in December 2009. During his-year term Mr Chui's major priorities will be to address rising public discontent and tackle corruption. He will as well need to introduce measures to diversify the economy, which has become overly dependent on the gambling sector.

Real GDP is estimate to grow strongly in 2012-13, albeit at a slower rate than the spectacular rates recorded in 2010-11. However, much depends on the health of the gambling sector, which is reliant on continued flows of visitors from mainland China. The public finances in Macau are strong, and the budget surplus will remain large in 2012-13. Inflation should moderate in the estimate period relative to 2011. The merchandise trade deficit will remain substantial.

The political scene

In his annual policy address in November, Mr Chui announced that the government will introduce proposals to reform electoral laws before the legislative election is held in 2013. Campaigners have called for the number of directly elected legislators to be increased. However, Mr Chui made clear that any decisions about political reform ultimately reside with the Chinese government, which has said it will look to find "consensus" on the issue.

Economic policy

The government will continue to give out cash handouts in 2012 in an effort to support the people during a period of elevated inflation. Each Macau resident will receive MPtc7,000 (US$873) in cash, in addition to other subsidies. Critics have pointed out that such giveaways fuel inflationary pressures and distract from the goal of creating a sustainable social welfare system.

The domestic economy

Economic increase in Macau remained strong in the second quarter of 2011, with real GDP growing by 24% year on year. Record gambling revenue and visitor numbers have fuelled this expansion, despite concerns about the possible impact of tighter credit policies in mainland China. The unemployment rate remained at a record low of 2.7%, but inflation continues to surge, with consumer prices increasing by 6.5% year on year in September.

Foreign trade and payments

The price of Macau's merchandise exports expanded by 22.1% year on year in the first quarter of 2012, while imports grew by 32.1%. In January-March total imports were nearly ten times better than exports, and the deficit on trade in goods widened by 33.6% year on year.

Macau's trade deficit widened to MPtc39.6bn (US$4.9bn) in the first nine months of 2011, as the price of merchandise exports fell by 4.3% on the year-before period and import payments grew by 44.2%. However, the territory's huge services surplus means that it continues to have a substantial current-account surplus.

Outlook for 2013-14

  • The five-year term of Macau's chief executive, Fernando Chui, will end in late 2014. During the remainder of his time in office, Mr Chui's main priorities will be to address public discontent and tackle corruption.
  • After allowing minor changes to Macau's electoral system in 2012, including an increase in the number of directly elected legislators, the central Chinese government is unlikely to approve further political reforms in 2013-14.
  • The Macau government will introduce measures aimed at diversifying the economy, which has become dangerously dependent on the gambling sector and continued inflows of big-spending visitors from China.
  • To reflect the impact of China's ongoing anti-graft campaign, the Economist Intelligence Unit has lowered its real GDP growth forecast for Macau in 2013 to 9.7%, from 14.3% previously.
  • The reduction in our economic growth forecast for 2013 will also lower inflationary pressures. We have brought down our forecast for consumer price inflation in 2013 to 5.8%, from 7.8% previously.

Review

  • While visiting the Chinese capital, Beijing, in March Macau's political leaders held talks over the new campus of the University of Macau, which is being built on the nearby island of Hengqin in China's Guangdong province.
  • The Monetary Authority of Macau (the de facto central bank) said in January that it expected the territory's economy to grow in the low single digits in 2013, and that the inflation rate would slow from its 2012 average of 6.2%.
  • The territory received 1.4m visitors during February 5th-15th, the traditional Chinese New Year holiday. This marked a record for such a space of time in Macau, suggesting that growth in tourist arrivals remains strong.
  • In January the government formally approved the application of MGM China Holdings to build its second casino, in Taipa. Its construction should help to support economic growth in 2013-14.
  • The unemployment rate remained negligible between November 2012 and January 2013, averaging 1.9%. This was lower than the rate of 2% recorded in October-December.
  • Consumer prices rose by 5% year on year in January. This was down from 5.8% in December, but may have been affected by the Chinese New Year.
Related Articles
  • Climate change laws around the world

    2017/05/14 There has been a 20-fold increase in the number of global climate change laws since 1997, according to the most comprehensive database of relevant policy and legislation. The database, produced by the Grantham Research Institute on Climate Change and the Environment and the Sabin Center on Climate Change Law, includes more than 1,200 relevant policies across 164 countries, which account for 95% of global greenhouse gas emissions.
  • Asia Economic Roundup: July 2016

    2016/07/18 Without a doubt Britain’s decision to abandon the European project will be remembered globally as a wake-up call for political elites around the world. It seems the people chose to go against immediate economic interest and accept an extra financial turmoil in order to address deeply seated social and identity issues. Although Asia’s exposure to the UK is relatively limited and this is not exactly a “Lehman Moment”, nonetheless we can expect a lively debate as policymakers in Asia look for an appropriate response to address the needs of vulnerable households.
  • Chan is also a Deputy Secretary-General (appointed by the Macao Government)

    2015/07/26 Echo Chan Keng Hong is a hardworking Macao resident who has presently assumed the position of Coordinator of the Support Office to the Permanent Secretariat of the Forum for Economic and Trade Cooperation between China and Portuguese-speaking Nations (Forum Macao). She is the right person in the right place at the right time, as businessmen and colleagues acknowledge. She is discrete but highly focused on getting the job done. In an interview with Macao magazine, it became clear that the civil servant has spent her entire career on work related to Portuguese-speaking nations. Before a director at the Macao Trade and Investment Promotion Institute (IPIM), Chan succeeds Rita Santos, but as well keeps her role as a non-executive director of IPIM.
  • Economic and trade cooperation between China and the Portuguese-speaking countries

    2013/11/18 Economic and trade cooperation between China and the Portuguese-speaking nations will be deepened, Chinese Vice Premier Wang Yang guaranteed on Tuesday in Macau, announcing an eight-point plan with specific measures to be implemented between 2014 and 2016. In the opening speech of the fourth Ministerial Conference of Forum Macau, Wang said that the initial of those measures would be the Chinese government’s granting of subsidised loans worth 1.8 billion yuan (US$293 million) to the Portuguese-speaking African and Asian Forum member nations.
  • Dr. Manuel Joaquim das Neves Director of Macau’s Gaming Inspection and Coordination Bureau

    2012/12/07 How do you explain the growing and resilient economy of Macau, when the world is facing the worst economic downturn?