SAR’s bleak scenario continues as GDP contracts 33% in Q3
The SAR’s gross domestic product (GDP) plunged 33.4% year-on-year in the third quarter of this year as the city battled its largest outbreak since 2020.
Due to the outbreak in June to July, the economy continued to deteriorate as Macau underwent 14 rounds of mass testing and a two-week lockdown – including closures of non-essential business activities.
The dramatic plunge was a continuation from the Q2 plunge where the city’s GDP fell 39.3% compared to the same period last year.
Data from the Statistics and Census Service (DSEC) shows that, with a 50.8% decline in visitor arrivals during the pandemic, exports of services fell 46.7% year-on-year, of which exports of gaming services and other tourism services tumbled 72.5% and 45.9% respectively.
The demand slid a further 14.4% year-on-year, dragged down by a drop in gross fixed capital formation and private consumption expenditure.
Amid the partial lockdown in July, household final consumption expenditure in the domestic market and abroad dropped 13.3% and 12.2% year-on-year respectively.
Previously, economists were quoted saying that though the data was alarming, it was natural that the GDP would fall substantially since the economy is at a standstill.
The city continues to adhere to Beijing’s zero-Covid policy, and as previously announced by Chief Executive Ho Iat Seng in the 2023 Policy Address, dropping restrictions remains unlikely – implying the policy is here to stay.
Speaking to the Times, economist José Luís de Sales Marques said that the contraction was expected due to the SAR’s current circumstances.
“After so many false starts to Macau’s economic recovery just a painful reminder that some kind of balance must be found between Covid prevention and market opening very soon so that the economy can rebound and with this some normalcy will return to Macau residents’ life and earnings,” he said.
Professor Kwan Fung, assistant professor at the University of Macau and advisor to the Economic Development Committee of Macau, has previously told the Times the Q3 GDP growth will be affected tremendously due to the June 18 outbreak.
He added that uncertainty over the anti-pandemic measures makes it very difficult for any economic analyst to predict the timing of economic recovery, given that Macau relies a lot on services driven by the flow of customers.
Back in June, Fitch Ratings expressed reduced confidence in Macau’s economic recovery as the city’s zero-Covid strategy “continues to constrain the cash-flow generation ability of Macau’s operators.”
Economists have forecasted the GDP drop would continue not only for the rest of this year but also extend throughout 2023 (depending on government policies). In line with this, the local economy during the three quarters of this year has contracted 27.8% in real terms.
