Economy | GDP fall slows to 13pct, growth may be on horizon

Macau’s economy contracted by 13.3 percent year-on-year in the first quarter of 2016, according to new data released by the Statistics and Census Service (DSEC), after accounting for the effects of inflation.
DSEC attributes the annual decrease to a continuous decline in the export of goods and services, which fell by 24.6 percent and 13.5 percent year-on-year respectively, while exports of gaming services dropped by 17.1 percent.
The 13.3 percent decline is lower than the final quarter of 2015, which registered a fall of 14.4 percent year-on-
year, and the third quarter before that, which saw a 21 percent decline.
Local economist José Sales Marques told the Times that the slowdown in the contraction is largely driven by a stabilization, or ‘new normal,’ in the gaming sector.
“It seems like gaming revenues are doing much better in May as per earlier reports,” he said. “The new data confirms suggestions from the beginning of the year that the slowdown may be coming to an end and that the economy might pick up in the second half of the year [2016].”
“Between Q3 and Q4 we may observe a 0 percent [year-on-year] contraction or even some growth,” added Sales. “It seems like we are on the road to recovery.”
Domestic demand dropped during the first quarter of 2016. According to DSEC private consumption expenditure declined by 2.3 percent, and the investment and imports of goods shrunk by 31.4 percent and 19.9 percent respectively.

According to DSEC, despite “the prevailing favorable employment conditions,” pay growth remained subdued which resulted in private consumption expenditure declining.
Final Government consumption expenditure rose by 1.5 percent, driven by an increase in the compensation of employees (+3.1 percent).
Meanwhile, the implicit deflator of Gross Domestic Product (GDP), which measures changes in prices, rose by 1.9 percent year-on-year.
Investment also registered a decline in the first quarter. Gross fixed capital formation, the main indicator of investment levels, contracted by 31.9 percent year-on-year due to the substantial decline in private investment, according to the bureau.
Private investment in construction and equipment diminished by 35 percent and 18.9 percent respectively, bringing it the figure down by a total of 33 percent.
On the other hand, government investment decreased by 5.5 percent year-
on-year, of which public construction investment fell by 6.5 percent while equipment investment grew by 91.1 percent.
Merchandise trade continued to deteriorate. A slowdown in investment, as well as decline in private consumption and visitor spending drove imports of goods down by 19.9 percent year-on-year, while exports of goods plummeted by 24.6 percent.
Furthermore, the service trade remains weak. Exports of services contracted by 13.7 percent year-on-
year, of which exports of gaming services dropped by 17.1 percent and tourism services were down by 11 percent due to a decrease in visitor spending.