UM adjusts GDP growth downwards

The Centre for Macau Studies and the Department of Economics of the University of Macau have adjusted their projections for the local economic outlook for this year downward after signs of cooling in mainland China.

The report notes that a key assumption has been reduced – visitors from the mainland are now expected to reach only 85% of record-breaking 2019 levels in the second half of the year.

Consequently, GDP growth was been revised to 12.1%, bringing GDP to MOP399.3 billion or 89.7% of 2019’s level. Alongside the GDP revisions, other forecasts have also been tweaked.

Service exports are now projected to rise 15.3% as visitor numbers stabilize, while private consumption should grow a modest 5.8% and inflation should ease to 0.9%.

Unemployment is predicted to hold steady at around 1.9% overall and 2.5% for residents, and tax coffers are expected to see MOP112.2 billion in revenues.

The revision comes after visitation slowed in the second quarter (Q2), with total arrivals down nearly 20% from early 2019’s pace.

Arrivals from the mainland fell over 23% short of pre-pandemic levels. Spending also softened, with gaming growing but non-gaming spending declining. However, domestic demand has proved resilient.

Consumption exceeded Q2 2019 despite headwinds for goods and overseas shopping, and investment rose nearly 7%.

Prices stayed tame, with food and housing inflation under 2%.

Furthermore, the job market held firm, with unemployment matching lows and median earnings for residents reaching 2019 levels.

Building on the latest visitor arrival data, the University of Macau’s research team has further refined its 2024 forecasts.

From January to July, arrivals from mainland China reached 13.72 million, accounting for 81.3% of the comparable 2019 period.

This prompted analysts to lower their second-half assumption for Chinese visitors to 85% of pre-pandemic levels, leading to the revised 12.1% GDP growth projection.

Other estimates have also been adjusted, with services exports anticipated to grow 15.3%, private consumption projected to see more modest gains of 5.8%, and inflation inching up to 1.3%.

Investment is forecast to rise a stronger 7.7%.

Positive signs remain, with median salaries expected to increase by 2.8% and unemployment holding at 1.9% overall and 2.5% among local residents.

Government revenue is estimated to be at MOP112.2 billion.

The revised outlook relies on the University’s renowned Macro econometric Structural Model of Macau, a sophisticated 87-equation model that tracks 209 variables quarterly since 1998. Victoria Chan