The University of Macau (UM) forecast on Tuesday that Macau’s economy will shrink 3.7 per cent this year.
The forecast was jointly announced by the public university’s Department of Economics and UM Centre for Macau Studies (CMS) during a press conference on the university’s Hengqin campus.
Tuesday’s press conference was co-hosted by Kwan Fung, assistant professor of the Department of Economics, Agnes Lam Iok Fong, director of the Centre for Macau Studies, and Chan Chi Shing, post-doctoral research fellow of the Centre for Macau Studies.
The annual Macau economic growth forecast by the university is based on the Macroeconometric Structural Model of Macau which was developed by economists at the UM Department of Economics.
The Macroeconometric Structural Model of Macau is a quarterly simultaneous-equations econometric model which currently covers seven segments of the Macau economy – consumption, investment, external sector, prices, government, the labour market, and the monetary sector, comprising 89 equations and 251 variables, the Department of Economics says on its website. Time series data used by the model start from the first quarter of 1998 and are updated once new data are available. Its results aim to provide the community with a “timely” understanding of the state of Macau’s economy and can help decision-makers to make “prudent” choices for the future, the department says.
According to yesterday’s press conference, Macau’s gross domestic product (GDP) is expected to shrink 3.7 per cent in real terms this year, ranging from a pessimistic rate of negative growth of 12 per cent to an optimistic rate of positive growth of 4.7 per cent.
“China and the United States have agreed to sign the phase-one trade deal to avoid the escalation of economic tension between both sides. However, the underlying disagreement between both sides has not been completely resolved, so that the conflict could reappear in the near future,” Kwan said.
“For [mainland] China’s economy, faced with debt accumulation and possible real estate bubble, the central government can only cautiously implement accommodative economic policies, so that its economic growth is expected to further slow down,” Kwan said.
“In an uncertain external environment, Macau’s economy is expected to continue to slow down in 2020,” Kwan said.
According to the Macau Post Daily, speaking to reporters on the sidelines of yesterday’s press conference, Kwan said that Macau’s investment in fixed assets was expected to have a significant decline this year. Being the most important sectors of the city’s economy, the tourism and gaming sectors are also suffering falling revenues, Kwan noted, adding that all these were key factors dragging down Macau’s economic performance this year.
According to data released by the Statistics and Census Bureau (DSEC) in November, for the first three quarters last year, GDP shrank by 3.5 per cent year-on-year in real terms. Full-year GDP figures for 2019 are slated to be published in March.