The latest revised macroeconomic forecast from the University of Macau (UM) points to a drop of between 26.4 percent and 29.2 percent in the territory’s economic growth this year
The forecasts are established taking into account two scenarios relating to the evolution of the Covid-19 pandemic and the number of visitors to the territory, indicated the analysis of the Centre for Studies of the UM Department of Economics, released in a statement on Wednesday.
Due to the limitations of internal and external conditions, “especially how to establish a set of prevention and control policies appropriate to Macau,” the public continues to see “no clear prospects” and “effective economic recovery may be far from being a reality”.
As well as the drop in economic growth, exports of services are also expected to fall between 31.3 percent and 33.6 percent, and the current revenues of the Macau government may be between 29.3 billion and 33.3 billion patacas (between 3.8 billion and 4.3 billion euros), according to the revised version of the Macroeconomic Forecast for Macau 2022.
The researchers recalled that in the first half of 2022, economic conditions for Macau were extremely difficult, with the government maintaining strict travel restrictions due to cases of Covid-19 in neighbouring Chinese regions.
In the first quarter of this year, gross domestic product (GDP) fell 8.9 per cent year-on-year.
In June and July, the territory experienced the worst outbreak of Covid-19 since the pandemic began, with authorities enacting 14 rounds of mandatory testing for the entire population and a two-week lockdown.
As of mid-June, GDP fell 39.3 per cent year-on-year to return to second-quarter 2020 levels. “Under the multiple and stringent local control measures, many daily activities could not be carried out, and the economy continued to deteriorate,” they indicated.
The researchers added that earlier this year, the forecast for the local economy pointed to a gradual opening up, and, even in the face of an outbreak in the territory, the worst case scenario would be a return to the economic growth level of 2021.
However, with the more contagious Omicron variant of the new coronavirus and stricter prevention and control measures, the situation has changed and the forecasts have not kept pace. On the other hand, external economic conditions have also changed significantly, with high inflation.
“For these reasons, the research team has revised the previous forecast and notes that economic conditions remain precarious for the rest of the year,” they stressed.
In response to possible changes in the evolution of the pandemic and government policies, the team considered two different scenarios: the first assumes stable growth in the fourth quarter of 2022 and the number of visitors reaching, again, the level of the end of 2021: 1.95 million.
The second scenario studied presents worse conditions: Macau will face another month of lockdown, receiving only 1.31 million visitors.
The researchers also noted that without tourist revenues, Macau’s economy “may not be able to develop normally” if the strict travel restrictions are maintained.
The forecasts also pointed out that, given current data, the various rounds of public support launched by the government since 2020 “have only a short-term and limited impact, and cannot replace the income earned by businesses and citizens through normal market transactions”.
In the first eight months of the year, Macau received 3.8 million visitors, down 25.8 percent from the same period in 2021 and 86 percent less than in 2019, before the pandemic began.
The overwhelming majority of visitors, more than 290,000, are from mainland China.
Late last week, Macau’s head of government, Ho Iat Seng, announced that China will resume allowing organised tours and the issuing of e-visas for visits to Macau by November.
Since the start of the pandemic, the Chinese central government has suspended group travel and the issuing of visas for individual tourists to Macau to prevent outbreaks of Covid-19.
The territory has recorded six deaths, 793 confirmed cases and 1,622 asymptomatic cases since the start of the pandemic.
