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Department of Economics of UM announces latest macroeconomic forecast for Macao 2010

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As the growth increased remarkably in the fourth quarter of 2009, the overall Macao economy is expected to revive more notably in 2010. According to the IMF forecasts on April 2010, the global economy is expected to expand 4.2% in 2010, the fastest pace since 2007. U.S. GDP will be expected to expand 3.1% and the Euro Area is likely to expand 1.0%. For the Mainland China, under the massive stimulus package aimed at lifting the domestic demand, the economy reverted faster than expected. GDP grew by 12.6% year-on-year and 11.9% year-on-year in the fourth quarter of 2009 and the first-quarter of 2010 respectively. This strong growth is expected to be continued through 2010. In the previous forecast, the Macao’s GDP was expected to decline 3.6% in 2009 with a conservative view on the recovery of global economy and the gaming activities. And it turns out that the Macao’s GDP rose 1.9% in 2009 with 51.3% increases in the exports of services in gaming in the fourth quarter of 2009. With a more positive outlook of world economy in the present forecast, Macao’s GDP is expected to grow by 14.4%, with ranged from a pessimistic 8.3% to an optimistic 20.5% in 2010, according to the Macroeconometric Structural Model of Macao.

 
Global economic recovery will pick up the exports of Macao. Our two major sources of visitors, Mainland China and Hong Kong, both are expected to have more solid growth in 2010. The exports of services are expected to have an annual 17.5% growth while the decline of exports of goods is also expected to decelerate in 2010 with annual rate of 13.6%. Concomitant with the recovery in the total exports and domestic demand in 2010, the imports of goods and services are expected to grow by 9.9% and 19.5% respectively in 2010.
 
For the domestic demand, the growth of private consumption spending has been dragged down since the financial crisis hit in the last quarter of 2008 and finally recorded a solid growth in the fourth quarter of 2009. The growth is expected to be 5.3% in 2010 with the economic recovery.
 
Signs of stabilization become visible and business sentiments are expected to revive. Many suspended casino and hotel construction projects are expected to restart in the second half of 2010. The overall growth rate of investment is forecast to rebound at a rate of 21.4% in 2010.
 
Inflation, as measured by the change in the Composite Consumer Price Index, is expected to rise mildly by 3.2% in 2010. For the aggregate economy, the GDP price deflator is forecast to increase 4.0 % in 2010.
 
The labour market is expected to tighten again amid the strong economic recovery. Unemployment rate is forecast to be 2.5% in 2010. Median monthly earnings are forecast to rise by 5.0% in 2010.
 
About the Macroeconometric Structural Model of Macao
The Macroeconometric Structural Model of Macao is a quarterly simultaneous-equations econometric model which currently includes 96 equations and 263 variables covering seven blocks of the Macao economy --- consumption, investment, external sector, prices, government, labour market, and monetary sector. Time series data used starts from 1998 first quarter and is updated once new data are available. Its results provide the community a timely understanding on the state of the Macao economy and facilitate the decision-makers to make prudent choices for the future.
Being one of the key research area, the Macroeconometric Structural Model of Macao is based on research led by Professor Sir James Mirrlees, conducted by the Department of Economics, and is sponsored by the University of Macau.

 


14/05/2010