Macau’s gross domestic product (GDP) fell 0.4 percent in real terms last year, the first annual drop since the establishment of the Macau Special Administrative Region (MSAR) in 1999, according to figures released by the Statistics and Census Bureau (DSEC) on Friday.
In the fourth quarter of last year, GDP was down 17.2 percent year-on-year in real terms, the second straight month of negative growth.
In the third quarter, GDP dropped 2.3 percent.
According to Investopedia, the technical indicator of a recession is two consecutive quarters of negative economy growth.
Customarily, a recession is defined as a situation when demand is sluggish, real output is not rising and unemployment is increasing. Overall, this was, however, not the case in Macau in the third and fourth quarters of last year.
The last time that the city’s GDP suffered negative growth was in 1999. In fact, Macau was affected by four consecutive years of negative economic growth in the run-up to the 1999 change in administration.
The fourth quarter of last year was affected by a significant decline in gross gaming revenue and shrinking visitor spending.
Exports of gaming services tumbled further by 28.9 percent year-on-year in the fourth quarter after a 12.3 percent drop in the previous quarter.
While the number of visitor arrivals increased, visitor spending decreased, causing exports of other tourism services to drop by 15.7 percent.
However, merchandise exports – mostly re-exports – grew by 42.7 percent, gross fixed capital formation expended by 27.7 percent, private consumption expenditure grew by 4.6 percent and government final consumption expenditure rose by 5.9 percent in the fourth quarter.
“Although the performance of other segments of the economy was comparatively good, Macau’s economy contracted by 17.2 percent in real terms in the fourth quarter on account of a 26 percent in exports of services,” the bureau said in a statement.
In the fourth quarter, GDP amounted to 105.1 billion patacas at current prices, down by 3.3 percent quarter-on-quarter in nominal terms.
For the whole of 2014, the economy shrank by 0.4 percent in real terms, resulting from a 10.5 percent growth in the first half but a 10.2 percent decline in the second half.
GDP amounted to 443.3 billion patacas at current prices. Per capital GDP was 713,514 (US$89,333), one of the world’s highest. Per capita GDP rose 3.1 percent year-on-year in nominal terms.
The statement underlined that last year’s economic contraction was mainly due to a 7.9 percent decrease in exports of gaming services.
The bureau pointed out that last year’s negative effects of decreasing exports of gaming and tourism services were largely offset by an improved performance of domestic demand, resulting in a “mere” contraction of 0.4 percent.
The GDP share of net exports of goods and services dropped from 60.5 percent in 2013 to 54.4 percent last year. On the contrary, domestic demand’s GDP share grew from 39.5 percent in 2013 to 45.6 percent last year.