Macau’s economy is expected to expand at an average of 4.9 percent per year in 2018/2019, supported by an upswing in the gaming industry, according to the Economist Intelligence Unit (EIU). In its latest report on the territory, the EIU said that the government’s efforts to diversify the economy should have very limited success.
Gross fixed capital formation, or investment, will be bolstered by public expenditure on housing and transport, at a time when private investors, particularly gaming concessionaires, are reducing or limiting their investment following the completion of new hotel or gaming projects.
In the two years under review, the Morpheus Hotel is due to open and will be operated by Melco Resorts. In addition, the Grand Lisboa Palace will also open and be operated by Sociedade de Turismo e Diversões de Macau (STDM).
Although the document mentions that Galaxy Macau (owned by Hong Kong-based Galaxy Entertainment) will invest HKD50 billion (about USD6.4 billion) in the expansion of its Cotai development, it added that the investment to be carried out in 2018/2019 will be significantly lower than in previous years.
The investment will be supported by public expenditure, including the construction of new social housing projects, the Islands’ Hospital (which will provide health services to the residents of the islands of Coloane and Taipa), as well as the Macau light rail network, which has so far only been under construction on the island of Taipa.
The EIU also predicts that while public efforts to diversify the economy will yield slim results, casino operators should invest “heavily” in tourism supply not directly related to gambling, thereby broadening the range of leisure activities available for locals and visitors alike.
The average of 4.9 percent per year for 2018/2019 can be broken down into an economic growth rate of 5.8 percent this year and 3.9 percent in 2019, while the inflation rate will be 2.2 percent this year and 2.9 percent in 2019. The positive balance of budget execution will be only one digit, with a rate of 8.1 percent in 2018 and 7.2 percent in 2019.
The EIU report said that the robust growth of the gambling sector in 2018/2019 will support employment and increase wages in the territory, in turn leading to an increase in household spending, which is expected to grow at an annual rate of 5.2 percent per year. MDT/Macauhub
No Comments