Economy | IMF says Macau growth could dip further still

A representative of the International Monetary Fund (IMF) has said that the worsening conditions of the China-U.S. trade war threaten to dampen economic growth prospects in Macau further. The warning comes just days after the IMF revised downward its growth expectation for the Macau economy next year.

Speaking to the South China Morning Post, IMF mission chief for Macau Mariana Colacelli said that the trade war “has the potential to drag Macau SAR’s growth below our medium-term projection of about 4 percent.”

Last Friday, the IMF published its latest report on Macau, projecting that the local economy would expand by about 4.3% this year and 4% in 2020, down from 4.7% growth last year.

The latest suggestion follows a trend of worsening forecasts.

Just one month earlier the IMF had forecast 4.3% and 4.2% growth for 2019 and 2020 respectively, while in February it had expected 5.3% growth this year.

In the February assessment, the IMF warned that Macau faces several medium-term risks, including the diminishing spending power of mainland tourists and the possibility that gaming revenue tax, which provides the bulk of government income, will be unable to keep up with mounting social welfare costs incurred by an ageing population.

The assessment found that risks to the Macau economy are “tilted to the downside” and “mainly emanating from mainland China.”

Depending on how the latest round of trade tensions between China and the U.S. play out, the IMF’s Colacelli says that growth for 2019 could dip below the 4% mark.

“Economic growth for the Macau SAR is projected at slightly above 4 percent for 2019 and 2020,” Colacelli said. “However, downside risks cloud this forecast.”

The main risk remains the flow of tourists from Macau’s major market: the mainland.

Any policy that undermines mainlander’s spending power abroad or leads to weaker-than- expected growth of the Chinese economy would hurt the economic growth of Macau, she told the SCMP. DB