IMF affirms economy will grow 14% this year in fresh report

The International Monetary Fund (IMF) has affirmed its prediction that the local economy will grow by 13.9% this year and 9.6% next year, according to its World Economic Outlook report.

Providing a comprehensive assessment of the SAR’s economic situation in the report, released recently in Washington as part of the Annual Meetings of the IMF and the World Bank, the IMF said that strong growth is expected to continue in 2024.

The IMF noted that the economic growth is bolstered by further recovery in the gaming sector and solid private investments, partly linked to the commitment of gaming concessionaires to invest in non-gaming sectors.

This comes as all six gaming operators pledge a significant amount to diversifying the city’s economy by hosting non-gaming activities in town to support the government’s aim of moving away from gaming.

As the gross domestic product (GDP) is expected to regain its pre-pandemic level in 2025, the medium-term growth trajectory hinges on the pace of Macau SAR’s integration with the Greater Bay Area (GBA) and the success of economic diversification efforts.

“Growth is projected to converge to 3% over the medium term. With narrowing output gap and increasing wages, inflation is projected to accelerate to 1.7% in 2024 and stabilize around 2.5 percent in the medium term,” the IMF said in its initial report.

“Sharper than expected slowdown in the property sector, local government financing stress and decline in investment, or rising geopolitical tensions will slow economic activity in Mainland China, with knock-on effects on Macau SAR’s financial system and economy,” the IMF said.

Recently, the Macau Economic Association announced its predictions for Macau’s first-quarter economic performance, indicating a promising recovery for the region.

According to the association’s forecast, GDP for the first quarter is expected to reach approximately MOP92 billion, reflecting a significant year-on-year increase of approximately 19%.

This surge in GDP signifies a recovery of approximately 82.8% compared to the same period in 2019.

The University of Macau (UM) revised its economic projection for the SAR last week, predicting a growth of 16.8% to MOP415.3 billion (equivalent to 94.5% of the 2019 levels) for this year.

Based on the latest economic data in 2024, the research team anticipates the economic slowdown in mainland China will have a relatively minor impact on Macau and has, therefore, revised the projected number of visitor arrivals from mainland China to be 90% of the 2019 level.

The revised baseline forecasts for other major economic variables include the growth of exports of services, which is projected to be 23.4%; as well as the overall unemployment rate, which is expected to be 2.2%.

On the mainland, China’s economy expanded at a faster than expected pace in the first three months of the year, helped by policies aimed at stimulating growth and stronger demand, the government recently said.

The world’s second-largest economy expanded at a 5.3% annual pace in January-March, beating analysts’ forecasts of about 4.8%, official data show. Compared to the previous quarter, the economy grew 1.6%.

China’s economy has struggled to bounce back from the Covid-19 pandemic, with a slowdown in demand and a property crisis weighing on its growth.