Economists say IMF figures regarding Macau can be misleading

A recent International Monetary Fund (IMF) report forecasts that Macau will become the richest place worldwide by 2020 in terms of per capita gross domestic product (GDP).

According to the IMF, Macau will surpass oil-rich Qatar by 2020, the country that currently leads the rankings with USD128,702 (MOP1,040,598) in terms of per capita GDP. Macau ranks second in the world, with a per capita GDP of USD122,489 (MOP 990,357), just behind the middle-eastern country.

Luxembourg and Singapore rank third and fourth respectively, while Hong Kong came in at 10th with a per capita GDP of USD64,533 (MOP 521,765).

It is forecasted that by 2020, Macau’s per capita GDP is expected to grow to MOP1.15 million, surpassing Qatar’s on the back of faster and more sustainable economic growth created by the gambling industry.

But what does that mean for the common citizen in Macau? Local economists interviewed by the Times say that the figure presented by the IMF can be misleading.

Economist Albano Martins said, “GDP per capita is theoretical wealth. This is really not a correct way to address the topic as this [analysis] is only accurate in places with an even wealth distribution.”

According to Martins, the results forecasted by IMF have to do solely with the fact that “the Macau’s population is small and the generated GDP [in the region] is relatively high […] Macau is one of the regions that experiences a higher inequality in the distribution of wealth, so this is in fact ‘fake richness’.”

Elaborating on the topic and namely on the perceived consequences of the forecast, Martins explained, “In Macau, in general terms, I expect that people who are politically more active will make use of this [report] to arrogate, which I think is acceptable. It’s a tool for people to call for what they in fact do not possess and it’s apparent to the large majority of the population as the large share of this wealth is distributed only in a very restricted area of the distribution scale which is of course the higher class.”

In Martin’s opinion, the report can be deceiving as, “In average terms I would have to say that Macau is probably one of the poorest regions of the world, with the exception for Africa, of course. But calculated in the way that it is presented [by the IMF] means that if one person earns 2 million and another earns nothing, [in statistical terms] they both earn 1 million.” He notes that the measure of per capita GDP is a normal “statistic indicator” but “it is only acceptable to use this [as a reference] in places with a more or less balanced [wealth] distribution. But when talking about regions like Macau and Hong Kong, where the distribution of wealth is highly unbalanced, this indicator does not really indicate anything. On the contrary, the use of per capita GDP will create confusion and dispute among the people who will feel that such distribution does not apply to them.”

Another economist heard by the Times, José Luis Sales Marques, explained that the nature of an IMF forecast means that it may not actually come to pass that Macau overtakes Qatar on the list.

Still, Sales Marques noted that the fact that Macau appears referenced in this assessment is not new and “in first, second or third [position], it basically means the same.” He recalled that the GDP per capita is a referential value that is used at international level to quantify the economic performance of a country or region.

In Sales Marques’ opinion, a more important reference would be one that takes in account the purchasing power of Macau people, “which is not the case here,” he noted, recalling that what  the IMF is taking into account only relates to the “international image in terms of economic performance.”

In the analyst’s opinion, reports like this from the IMF do not make a significant difference to society, as “people are quite aware of the high living costs of the region and the difficulties of entering certain areas such as the real estate market, but also the high living costs in general.”

In that sense, Sales Marques thinks that there is “a lot of work to do, namely in terms of quality of living and associated services.”

In his opinion, there are many aspects of daily living that “I can’t say are bad, but I think – and people perceive – could be much better.” Such aspects include health- related services and traffic and environmental aspects.

“There are many things that we could have taken note of, precisely because Macau is one of the most wealthy economies of the world,” he said. According to him, this is basically a matter of “expectation from the population that comes from the comparison [between Macau and other regions].”

“Japan is good example and even Hong Kong, although their GDPs per capita are not as high as Macau, but, in many aspects, we can see that the quality of life is far higher.”

According to the economist, one of the issues that might be contributing to this reduced quality of life is the “lack of concurrency” in the market. He said that the lack of “competition in most of the services, goods and amenities of Macau, lead the few companies in the business to practice non-competitive pricing,” dramatically increasing the living costs. This affects “not just what we earn in gross terms but what we earn in relation to what we can buy.”