A research team consisting of economists from the Department of Economics of the University of Macau (UM) has announced that due to the COVID-19 pandemic it now forecasts that Macao’s economy will drop by between 55.7 per cent and 59.1 per cent this year, in which case its gross domestic product (GDP) will return to the level it was in 2005 or 2004 in real terms.
A statement by the public university on Monday said that the research team has adjusted its forecast on Macao’s GDP for this year that it had made in January due to the seriously adverse impact of COVID-19 pandemic on Macao’s economy.
According to the statement, the research team has come up with five possible scenarios with different numbers of total visitor arrivals for this year: 1) 5.16 million, 2) 7.92 million, 3) 9.9 million, 4) 10.68 million, and 5) 12.66 million.
The research team forecasts a GDP drop of 59.1 per cent, 58.4 per cent, 57.7 per cent, 55.8 per cent and 55.7 per cent based on the five respective scenarios, the statement said.
According to the statement, the research team believes that the first or second scenario is more likely to happen this year. The third, fourth or fifth scenarios (9.9–12.66 million visitors) could only happen if Macao’s economy rebounds in the second half of this year, the statement said.
If Macao’s economy drops based on the first or second scenario, its GDP in real terms will return to the level in 2004, while it will shrink to the 2005 level based on the third, fourth or fifth scenarios, the statement quoted the research team as saying.
In early January – before the COVID-19 epidemic emerged in Macao – the team initially predicted that Macao’s economy would shrink 3.7 per cent this year. The annual Macao economic growth forecast by the team is based on its Macroeconometric Structural Model of Macao, a quarterly simultaneous-equation econometric model which covers seven segments of the Macao economy – consumption, investment, external sector, prices, government, the labour market and the monetary sector, comprising 89 equations and 251 variables.
According to the Statistics and Census Bureau (DSEC), Macao’s GDP dropped by 48.7 per cent year-on-year in the first quarter in real terms.
In nominal terms (current prices), the GDP in the first quarter of MOP 56.576 billion was around the same as the GDP in the 2010 third quarter of MOP 56.87 billion. In real terms, based on the 2018 price level, Macao’s GDP in this year’s first quarter of MOP 54.397 billion was back to the level of 2006 third quarter of MOP 54.381 billion, according to the bureau.