The Monetary Authority of Macao headquarters
GROWING trade tensions between China and the U.S. are likely to affect Macau’s economic performance this year in a negative way. That is one of the conclusions that could be reached by reviewing the latest report from Monetary Authority of Macao (AMCM) on Monetary and Financial Stability Review – Issue 50, published recently.
After analyzing the forecasts provided by the International Monetary Fund (IMF), another conclusion reached by the Research and Statistics Department of AMCM is that, “downside risks to global economic outlook have become more pronounced in recent months. Taking into account that China-U.S. trade tensions might soften trade growth and worldwide growth momentum, global financial conditions are expected to tighten alongside monetary policy normalization.” The Department noted that the IMF have revised their projections of world growth down by 0.2 percentage points for 2019 and by 0.1 percentage points for 2020.
The report also points out “uncertainties” for other Asian markets due to the same issue, corroborating the possible negative influence of the trade tensions between China and the US, not only directly but also indirectly due to its regional effects.
The AMCM notes that Macau’s “highly open small economy” is sensitive to external shocks, noting that “vigilance is required towards a number of key risk factors in the near and medium term, including the deceleration of growth momentum in major economies, [and] further tightening of financial conditions across advanced economies.”
On the positive side, the report notes that the opening of the Hong Kong-Zhuhai- Macau Bridge “will further bolster the strong visitor base of Macau,” and that “new integrated resorts to be opened in 2019 will also lend support to external demand for tourism services.”
To tackle the possible challenges presented by trade wars and instability, the report notes that reinforcing regional cooperation is “crucial to overcoming the limitation of small-domestic market,” as is strengthening the status of Macau as service platform between China and Portuguese-speaking countries. RM
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