Group expects economy to gradually recover

Citing the resumption of mainland tour groups and travel endorsement e-applications, the Macau Economic Association expects the prosperity index to gradually increase in the coming months.

Despite the expectation, the association said the index will remain low at about 2.2 to 2.4 units.

The group said Macau had become more resilient against Covid-19 following the June 18 outbreak. It added that last month, when sporadic cases were recorded, the infections were quickly controlled.

However, it warned society to remain vigilant as a three-year peak of infections was detected in Guangzhou.

Unsatisfactory factors include America’s continuing inflation and interest rate hikes. Interest rates have reached their highest point since 2008, with six rises this year. Within 11 months, the Federal Reserve (Fed) has increased the rate by 3.75%.

Under the linked exchange rate system, the Hong Kong Interbank Offered Rate (HIBOR) in the past three months has remained over 3%. The group said the market expects the Fed to raise interest rates several more times before the trend reaches its peak.

Against this background, as of end-September, the non-performing loans ratio in Macau rose to 1.11%, a threefold rise year-on-year. The group expects the ratio to rise further in the coming year.

The M2 money supply fell in September, dropping by 1.3% after remaining stable in the previous month. Casino operators’ stock prices have also performed weakly. The group attributes the poor performance to a lack of investor confidence.

Although the determinants for the index improved after the June 18 outbreak, its performance was far from those before the Covid-19 pandemic, the group added.

The indices for September and November were 2.1 units and 2.2 units respectively.