The city’s prosperity index will likely bounce out of low rankings during or by the second quarter next year, the Macau Economic Association (MEA) has estimated.
The association has also estimated that the city’s prosperity indices for the upcoming three months would likely range between 2.3 and 2.4 points – a swing between “low” and “unsatisfactory” levels.
The major supportive factor is that Beijing has recently announced its new measures on the containment of Covid-19 across the country. These measures have been enacted in many major cities in mainland China as well as in Macau with local adjustments.
The move has not only loosened physical restrictions, but has also boosted inter-regional travel. Flights have increased in frequency in many mainland airports and casinos in Macau have gradually seen more gamblers occupying tables.
This recent period was described by the MEA as “the twilight before dawn,” hinting that the association found it preferable.
Nonetheless, the association pointed out that local residents are getting sentimental both positively and negatively. On one hand, they are happy to be moving towards a normal life, but on the other hand they fear contracting the virus.
Another preferential factor is that the “new” casino operators have promised to increase investments from January 1, 2023, to upgrade non-gambling elements, as well as attracting foreign visitors.
Unsettling factors, in contrast, lie in escalating interest rates, the MEA pointed out. The Hong Kong interbank offered rate (HIBOR) has recently surpassed 5%, which is higher than the newly established mortgage prime interest rate and HIBOR cap interest rate. An inverted yield curve has also occurred in the rates for deposit and loan.
Moreover, 7.1% and 6% rises were recorded in the November non-core and core Consumer Price Indices in the US, which the association considers relatively high, although they were lower than market expectations.
The 0.5% interest rate rise decided on by the US Federal Reserve yesterday morning (Macau time) has been immediately reflected in the local interest rate. A heavier burden will be laid on local capital, corporate loans and individual mortgages, placing further pressure on asset prices and bad loan ratio, the association pointed out.
As for the past two months, the indices were calculated to be 2.1 and 2.2 points – still running low. Major factors that caused the indices to be pessimistic are the lack of visitor arrivals and casino revenues. Actual and potential purchasing power, on the other hand, was still weak.
