Macau Opinion | The economy, that complicated thing

  1. On September 1st of this year, I wrote “(…) a great deviation will be the forecast of the Macao GDP for 2017 made by the IMF, which has been on the rise, sometimes on the crest and digging from 0.7 to 0.2 and then 2.8 and finally to 2.5 per cent.

Or Moody’s that shows a GDP of 2.5 per cent, but negative.”

Later, I wrote that “(…) in December last year (…) a substantial fall in gross fixed capital formation (GFCF) was expected.”

Statistical data point to GDP growth in the three quarters of this year of 9.3 per cent in real terms, with gross capital formation falling, in real terms also, of 2.23 per cent, but this fall will accelerate in this year, with GFCF likely to suffer a double-digit decline at the end of 2017.

If that happens, it is very likely that economic growth will not reach double digits despite continued revenue growth in gaming, growing less than the figures of the third quarter.

On the other hand, the deflator is being less ‘nice’ to the economy by pulling it down!

Macau’s real GDP growth may well be around 8.1 percent in 2017!

I believe today that although the income growth for gaming was 19.05 per cent in 2017, I will not be far from the truth.

Thus, hardly by the end of 2017 our real GDP could reach double digits, given the substantial fall in GFCF.

Thus, the latest IMF forecasts (from October, I believe) that Macao’s GDP would grow by 13.4 per cent in 2017 still do not convince me.

By 2018, Macau GDP will grow less because income from casinos, even though it grows, will grow less, and because the GFCF will drop substantially.

  1. With regard to inflation, IMF forecasts will again be misplaced when they refer 2 per cent in 2017. It will not exceed 1.2 (3) per cent and if I fail it will be only a hundredth.
  2. Regarding Macau’s inclusion on the European Union’s blacklist I said last month that this decision was mainly to complicate the commercial life of Macao companies. Information came to me a few days ago that confirms my fears. European banks begin to refuse transfers to Macao and one of them even wants to close the accounts of companies that have a business centered in Macao!

Don’t things get complicated?