Who dares to make predictions?

No one seemed prepared for the economy to collapse and within a few months, the forecasts were widely revised. It is not easy to work with Macau’s economy, as it’s so dependent on external factors, experts explain. 

MB Jan 2020 Special Report | IMF: from glory to recession


September 2018: A macroeconomic forecast devised by the University of Macau Department of Economics and Centre for Macau Studies predicted that Macau’s GDP will grow 7.1 per cent in 2019. 

These estimates were more optimistic than the previous predictions by the International Monetary Fund (IMF) that Macau’s GDP will grow by 6.1 percent in the same 2019. 

So far so good. A growth of around 6 or 7 per cent was a good score, even inferior to 2018 (9.7% per cent). 

But the first alarm signal came up when, at the beginning of the year, University of Macau experts significantly revised the forecast for this year to 2.7 per cent. 

After that it was the turn of the Economist Intelligence Unit (EIU) to also stab the numbers, pointing to a growth by 3.2 per cent. 

A month later it was the IMF’s turn to correct the data. 

After all, Macau’s economy would no longer grow by 6.1 per cent, but should stand at 4.3 per cent. 

And in May American credit rating agency Moody’s came to say yes, that the IMF forecast was right, but giving it another two tenths to 4.5 percent. 

And here comes September, the month that brought the bad news: EIU (-1.0 per cent) and University of Macau (-0.8 per cent) did not wait any longer and decreed that 2019 will be a year of negative growth. 

Just a month later, the IMF released its bi-annual report, further aggravating the forecast: -1.3 percent. 

“IMF staff update global forecasts on a continuous basis. Detailed IMF forecasts are published at least twice a year, with the April and October WEO publications,” explains Mariana Colacelli who is IMF Mission Chief for the MSAR, to Macau Business. “Each update takes into account latest data and most recent developments, reflecting the information available before the vintage is published. In cases when circumstances change significantly, as reflected by latest data releases in Macau SAR, the forecasts may show large revisions.” 


“Macau GDP is highly volatile. When we do the forecast, there is a lot uncertainty around it” – Chi-shing Chan… 

“Macau is a small open economy which depends on gaming industry. And gaming industry depends mainly on mainland China visitors. So Macau GDP is highly volatile. When we do the forecast, there is a lot uncertainty around it. Actually, other than the baseline forecast, we also provide interval forecasts reflecting the uncertainty,” comments Chi-shing Chan, researcher from Centre for Macau Studies, one of the authors of the UM projections. 

“As Macau GDP highly depends on mainland China visitors, we need to make forecast on the Chinese economy. Between the two forecasts you mentioned, economic environment has changed. When we prepared the first forecast, we were expecting a trade deal between the U.S. and China. Also, China’s government has prepared several accommodative policies. However, the U.S.-China economic relations deteriorated, and China’s accommodative policies did not revive the economy enough. Hence, we need to revise our GDP forecast downward,” adds Mr. Chan, who explains the “range of GDP forecasts from different institutions (including us)” this way: “the differences reflect how people view the future Chinese economic growth. It depends on a lot of political decisions which are easily reversed. What our team would do is monitor the situations as close as possible and update our forecasts.” 

Florence Lei, the Coordinator for the Bachelor of Government Studies programme, University of Saint Joseph, told Macau Business, on the volatility of the macroeconomic projections: “I took growth data from IMF’s World Economic Outlook Database, which are available from 2002 to 2018, and calculated the standard deviation to be approximately 11.31 per cent. Such volatility justifies the standard error of the forecast.” 

Last month the Economist predicted 5.5 per cent recession in Macau by 2019 and 3.3 per cent by 2020. MSAR will return to a 2.9 per cent growth in 2022.