Macau’s GDP stood just slightly above one-third of the figure recorded last year in the third quarter. Notwithstanding an almost ‘normal’ first quarter, which included the Chinese New Year week, the running total for the year up to September is 40 percent of the value logged last year in the same period. Private consumption and investment were also noticeably down. In absolute terms, the rise seen in public spending could not ‘compensate’ the decrease in private investment, let alone the total reduction in private spending.
The continuation of the current state of affairs will keep depleting the ‘resistance’ reserves upon which both people and businesses have relied so far. We are in the midst of a severe contraction, one that cannot end without a significant resumption of the people and money flows that usually keep this economy running.
However, the prospects of ‘normalization’ of the economy are successively moved forward. Inevitably, with the external flows almost frozen, and the domestic private sector shivering, the public budget gets even more attention than usual. The proposal, currently being discusses at the Assembly, seems the sole lever over which we still have some control.
We should carefully weigh how to use it to mitigate the current hardships and, more importantly yet, how to carve paths to a renewed prosperity. Of course, we must be aware that even at the best of times, the public budget can only do so much and that the crisis burdens may be distributed very unequally.
The abundant reserves gathered over the boom years are not an endless respite provider from a punishing economy. In absolute and relative terms, their amount is undoubtedly impressive and could be used more aggressively; but they cannot replace a normally functioning economy.
A first look at the proposed budget does help to dispel anxieties. The basis for calculation is unclear. Traditionally budgets have underestimated revenue, primarily from gambling activities. The figure may, for once, be overstated in the current state of the economy, while the current waiting strategy hinged on a pandemic breakthrough runs its course. On the other hand, the proposed expenditure will decrease – and the government has usually under-executed the public budget. It looks set to add to our depression, not to counter it.
Under such circumstances, it is somewhat perplexing the proposed budget seems mainly focused on preserving the reserves. Hopefully, the Assembly debates will clarify the policy assumptions behind these figures.