Macau’s purchasing power in 2023 nearly 30% lower than pre-pandemic levels

A report from Global Finance Magazine on the “Richest Countries in the World 2023” revealed that Macau’s per capita purchasing power this year dropped nearly 30% compared to 2019 pre-pandemic levels.

Based on data from the International Monetary Fund and World Economic Outlook April 2023, the annual report noted that despite a significant recovery, Macau’s performance this year is still 28.4% below 2019 figures, with the region initially commencing the year with some USD124,670 per capita.

From around the third quarter of 2016, Macau led the ranking of 193 countries and regions according to their gross domestic product (GDP) per capita, corrected by the purchase power parity (PPP).

Macau’s performance started to drop right before mid-2019. It ended 2019 in 13th position behind Luxembourg, Singapore, Ireland, Qatar, Switzerland, United Arab Emirates (UAE), Norway, Brunei, USA, San Marino, Hong Kong, and Denmark.

Macau recovered to the seventh position in 2021 but dropped significantly to the 16th position in 2022 with just USD55,714.

A major economic recovery fueled by the performance of the gaming industry brought Macau to 5th place globally in 2023, with USD89,558.

The ranking is currently led by Ireland, followed respectively by Luxembourg, Singapore, and Qatar ahead of Macau.

The report highlighted the severe impact of Covid-19 restrictions on the local economy, especially on the performance of the gaming sector, but noted that the sector as a whole is now “slowly returning to business as usual.”

Notwithstanding this, Macau remains the only region on the list whose per-capita purchasing power is lower than before the global pandemic — down by more than USD35,000 today compared to USD125,000 in 2019.

The Global Finance Magazine report also notes that some of the richest countries and regions of the world are also the smallest ones, including San Marino, Luxembourg, Switzerland, and Singapore (which boasts sophisticated financial sectors and tax regimes that attract foreign investment, professional talent, and large bank deposits) as well as others like Qatar and the United Arab Emirates, which have large reserves of hydrocarbons or other lucrative natural resources.

The reports noted that Macau’s “shimmering casinos and hordes of tourists are also good for business.” As such, the report noted that Macau remains one of the most affluent states in the world despite almost three years of intermittent lockdowns and pandemic-related travel restrictions.

Moreover, it was observed that while the GDP-PPP formula incorporates adjustments to allow a comparison between countries and regions, the GDP-PPP figure is an average measure that does not necessarily reflect structural inequalities within each country or region, which “can easily swing the balance in favor of those who are already advantaged.”

As such, overall populations within high-scoring regions and countries may not be visibly better off than other places worldwide.

The report also noted that the pandemic made some of these disparities visible in ways few could have predicted.

“Furthermore, the economic fallout of lockdowns hit low-paid workers harder than those with high-paying occupations. This in turn fueled a new kind of inequality between those who could comfortably work from home and those who had to risk their health and safety by traveling to work. Those who lost their jobs because their industries shut down entirely found themselves without much of a safety net—large holes in the most celebrated welfare systems in the world were exposed.”

As the pandemic subsided, “inflation surged globally and Russia invaded Ukraine, exacerbating the food and oil price crisis.” These factors disproportionately affected lower-income families who were forced to spend a greater proportion of income on necessities.

Mixed feelings from population

The Times surveyed members of the public at random, the majority of whom reported noticing a decrease in their purchasing power, taking into account inflationary pressures and the downstream impact on rising costs of goods and services.

Most of those who noticed rising costs cited an approximate increase of 10% between pre-pandemic times and the present day. Several noted that they felt incapable of meeting their daily expenses during the pandemic.

On the other hand, several interviewees said they felt that their purchasing power had reverted to pre-pandemic levels, noting that during 2023 their employers had increased wages via promotions or approving requests to work overtime, rather than direct salary increases.