Q1 GDP 50% lower than pre-pandemic levels

The Macau SAR’s gross domestic product (GDP) has declined further, by 8.9% year-on-year in real terms in the first quarter of 2022, as a result of weakening total demand.

GDP recorded for the first three months of 2022 is significantly below pre-pandemic levels, some 50% lower when compared to the first quarter of 2019. 

Domestic demand shrank by 1.2% year-on-year on account of a decline in private consumption. Imports of goods and services rose by 29% and 2.8% respectively, according to data from the Statistics and Census Service (DSEC). 

With inflation low at 0.3%, nominal GDP was down by 8.6%.

Exports of services decreased by 4.7% year-on-year, of which exports of gaming services dropped by 25.1% as the casino sector is still on the brink of a revenue downturn.

Macau’s gross gaming revenue for the year’s first quarter was MOP17.77 billion, down 24.8% on the MOP23.64 billion recorded in the first three months of 2021.

This comes after the city’s gaming revenue plunged 55.8% to MOP3.67 billion in March, the lowest level in 18 months due to the worsening Covid-19 outbreak in China which battered tourism in the city.

Meanwhile, exports of other tourism services have increased by 1.9%, while exports of goods expanded by 56.8%.

Total expenditure by visitors (excluding gaming expenditure) rose by 6.7% year-on-year to MOP6.59 billion in the first quarter of 2022, despite consecutive downturns in visitor arrivals from January to March.

Meanwhile, in the face of an uncertain economic outlook and a sluggish job market, residents’ spending on durable and semi-durable goods declined, leading to a year-on-year drop of 2.2% in household final consumption expenditure in the domestic market. 

Government final consumption expenditure showed a decrease of 2% year-on-year, attributable to a reduction in expenditure on pandemic prevention by the SAR government.

Earlier this year, a forecast from the International Monetary Fund (IMF) stated that the level of the city’s growth is expected to surpass its pre-crisis level only in 2025, given the depth of economic losses during the pandemic.

The IMF stated that the city’s recovery will likely continue throughout 2022 due to the strong fiscal support and financial strength of the gaming operators, which has cushioned employment and consumption.

The sharp decline of economic activity exposed Macau’s vulnerability to external effects on the inflow of tourists, with the IMF noting that the pandemic’s impact on the city’s growth only highlights its lack of diversification beyond the gaming industry.