Economy shrinks by nearly 40% amid pandemic woes
The city’s economy contracted 39.3% year-on-year in the second quarter of 2022 amid the pandemic outbreak in the neighboring regions, which affected the city’s border restrictions, and along with the city’s largest outbreak that started mid-June.
Visitor arrivals fell 27.5% year-on-year in the second quarter, with overnight visitors decreasing 47%, data from the Statistics and Census Service (DSEC) shows.
As a result, exports of services dipped 48.6% year-on-year, while exports of gaming services and other tourism services tumbled 69.6% and 41.4% respectively. Exports of goods fell 36%.
Domestic demand shrank 12.2% year-on-year owing to a decline in gross fixed capital formation. Imports of goods and services reduced 20% and 12% respectively. The implicit deflator of GDP, which measures the overall changes in prices, fell 0.9% year-on-year.
In April, the International Monetary Fund (IMF) forecasted that the SAR’s economic recovery was expected to continue, but that it would take time before the economy fully regained its losses from the pandemic outbreak.
The IMF projected 15.5% GDP growth in 2022, driven by the gradual return of foreign tourists and the recovery of domestic demand.
However, the city’s mid-June outbreak saw an almost-complete halt in tourist arrivals due to restrictions imposed by the neighboring region which required arrivals from Macau to undergo mandatory quarantine.
The outbreak has also led to a partial lockdown including the shutdown of casinos – the second shutdown in two years – to curb the coronavirus, leading to record low revenues in July.
Gaming Inspection and Coordination Bureau figures show the city’s gross gaming revenue for the second quarter has plunged to HKD8.2 billion, down 67% year-on-year and down 52% quarter-on-quarter.
This comes as Macau adheres to Beijing’s zero-Covid policy, which strives to drive down the number of Covid-19 cases by means of lockdowns, border closures and travel bans.
Consumption expenditure
Household final consumption expenditure in the domestic market and abroad dropped 6.3% and 4.1% year-on-year respectively, as consumer sentiment was further dampened by the economic downturn and local economic activity was affected by the new confirmed cases of coronavirus infection in the territory in late June. Overall private consumption fell 6.6% year-on-year. Government consumption expenditure shrank 6.5% year-on-year, attributable to a reduction of 15.7% in net purchases of goods and services by the SAR government.
Gross fixed capital formation decreased 29.4% year-on-year, while construction investment dropped 41.4% and equipment investment grew 17.5%. Public construction investment dropped 24.3%, ascribable to a fall in investment in public housing construction.
