Economic climate index forecasts stability despite uncertainties

[Photo: Lynzy Valles]

Macau’s economic climate index is expected to remain in the “stable” range over the next quarter despite continued external uncertainties, according to the latest report from the Macau Economic Association.

The index is forecast to remain between 6.1 and 6.5 points after registering 5.7 and 6.1 points in June and July, respectively. The July reading fell slightly short of market expectations.

The association said the recent appreciation of the renminbi could provide some near-term support for local consumption and services by increasing the purchasing power of mainland visitors.

However, several key indicators pointed to continued weakness in the economy.

Gaming revenue in June and July stood at MOP18.5 billion and MOP20.2 billion, respectively, both representing year-on-year declines. Visitor arrivals fell to 2.8 million in June, while hotel occupancy and guest numbers also softened.

The six integrated resort (IR) operators saw their average monthly closing prices fall 31.8% year-on-year, reflecting a cautious market outlook amid external headwinds, the report said.

Meanwhile, the loan-to-deposit ratio remained at a historic low of 43.5%, indicating ample banking liquidity but subdued credit demand from businesses and households.

The residential property price index stood at 188.2, continuing its downward trend, while broad money supply (M2) remained elevated at MOP847.6 billion.

The labor market remained stable, with the overall unemployment rate at 1.9% and the unemployment rate among local residents at 2.4%.

From this month, the economic climate index has been expanded to 15 indicators with the inclusion of electronic payment transaction data for the food and beverage and retail sectors, according to the report. The additional data is intended to provide a more accurate picture of local consumption trends.

The association said the renminbi’s recent strength could provide some momentum for tourism-related spending, but external risks remain, including persistently high US interest rates, volatile oil prices and geopolitical tensions.

It therefore urged continued caution in assessing the city’s overall economic outlook.