Economy thought to have shrunk 5.2% this year, EIU says

Macau’s economy will contract at a rate of 5.2% in 2019, according to the latest forecast from the Economist Intelligence Unit (EIU), a significant drop from the prediction of a 1% contraction made just three months ago. The EIU’s forecast also now predicts 2021 will be the year in which the territory will return to growth.
The latest official figures published by the Statistics and Census Bureau for the third quarter of 2019 show that from January to September, the economy of the territory shrank by 3.5% year-on-year, with a pronounced contraction of 4.5% in the third quarter.
Cited by Macauhub, the EIU analysts also forecast that the economy of the territory will contract again in 2020, with a negative rate of 3.3%, and the average contraction in the 2019/2020 period will be 4.3%, due to the cooling of the gaming sector and the lack of new investment projects in this area.
The EIU expects the Macau economy to return to growth following the signing of a trade agreement between China and the United States, which is expected to lead to an increase in the number of Chinese tourists seeking destinations abroad.
The report said that despite the slowdown of the Chinese economy in 2020/2021, the average income in the country will continue to grow, which will lead to an increase of mass tourism and of the gaming industry in Macau, which will prevent the territory from experiencing a sharp contraction of its economy.
The EIU recalls the efforts of the local government to diversify the economic fabric of Macau and move the territory away from its dependence on gambling. However, it warned that these efforts will not produce any significant results before 2021.
It will be up to the gaming concession holders to increase non-gaming offers to tourists in order to attract more people to visit Macau, according to Macauhub.
Meanwhile, the rate of inflation will remain stable at around 3% in the period under review, as well as the interest rates for loans, at about 5.4%, as well as Macau’s budgetary balance, which will be 12% of the territory’s gross domestic product.
In September, the EIU had predicted that growth would return during the second half of 2019 to round out the 12-month period with a 1% contraction. It had based the prediction on the fact that the second quarter contraction of 1.8% had seen an improvement compared to the 3.2% decline in the first quarter of 2019. DB/Macauhub