Exports
The death of the manufacturing sector in Macau has been announced several times in the last decade or so. At every moment, for one reason or another, what appeared to be the irreversible downward trend proved to be less dramatic than expected. In some cases, as argued in this space before, the contraction even seemed to be resulting in a leaner but more efficient production. Which, by itself, was not necessarily a bad development. The 2009 data, however, suggests that a somewhat more persistent pattern is taking hold. Not only the downward trend has accentuated, but also the its strongly seasonal behavior has changed markedly – in fact, it is
not anymore there.
So, as shown in Table 1, something different is happening at this time. The exports throughout this year have reached a low level plateau, as the usual recovery from the always very low figures at the beginning of the year has not happened. Exports have mostly stabilized around a level that is less than half the average of the previous five years.  And, most notably, the historical driver of goods exports – apparel – keeps contracting. The relative stability of the latest overall figures owes mostly to the rise of non-traditional exports.
As Table 2 highlights, even the other usual suspects – machines and shoes – have for long been stuck at very low levels and are approaching irrelevance. As mentioned above, the main driver of exports has been for a long time, apparel. And its main markets were the United States and, in a smaller but nonetheless very significant way, the European Union.
Table 3 shows the neat contraction of the imports from those markets, both reaching almost trivial levels throughout 2009. The same table also shows that for all the talk about integration and deepening relationship with the mainland, that market is still of little significance. This time, for once, the claim that the end of manufacturing is nigh looks warranted.

Real estate: Housing and commercial markets
The world financial crisis has left the territory relatively unscathed. After a first period of uncertainty and economic slowdown, the evolution of the mainland economy could hardly be more favorable to our flagship sector. On the one hand, there was a strong injection of public money in the Chinese economy; on the other, the internal credit just boomed prodded by the incentives and guarantees of the central government. The recent growth recuperation has contributed to the resumption of some of that sector’s suspended works; and the re-start of others has been announced for the next months. Inevitably, the talk is again of a rising tide in the real estate market. Looking into the supply side, the overall figures give some credence to such expectation.
Table 1 highlights the fact that since the ‘de facto’ opening of the gambling sector to new operators, the total number of built units has not increased by any amount that could be commensurate with the growth of the economy and population in the last few years. In fact, one could expect that the ‘overcapacity’ from the previous boom would provide some slack – and so it did. Some of the market imbalances and correspondent price rises were arguably as much more the result of inflated expectations and serious mismatches in certain segments than the result of an overall absolute scarcity.
That much is suggested by Table 2, which displays the percentage of units vacant throughout that period. The significant reduction of that share nonetheless, there has always been a notable amount of vacant units, hanging at about 10% of the supply for most of the period. Besides, the price behavior has been markedly diverse according to the areas of town considered.
Table 3 shows that the intensity and timing of the price changes has been significantly different in the three major city areas: Macau peninsula, Taipa and Coloane. The picture is, therefore, more complex than sometimes we may be led to believe. The repeat of the previous behavior is unlikely at this stage, as some new factors have to be brought into the analysis. First, the investment cycle is approaching its end; second, policies towards imported labour became more political sensitive; third, the zoning of the new reclamation areas has still to be clarified. It is unlikely that the recovery will see a boom in prices of the previous magnitude.

by José I. Duarte
Economist /Macau Business
Senior Analyst Data source: DSEC
Charts and graphics in our paper edition and MB online browseable