“Much better growth momentum” seen in the third quarter will in likelihood push 2023 expansion in China’s gross domestic product (GDP) to 5.2 percent, says UBS Securities Asia Ltd. That compares with a previous full-year forecast of 4.8 percent, said the institution in a recent report.
“Third-quarter growth momentum came in better than our previous expectation. Property sales were less bad in September and the first half of October … thanks to more policy easing since end-August,” stated the memo, with comment led by UBS’s Hong Kong-based head of Asia economics and chief China economist, Tao Wang.
Carlos Siu Lam, associate professor at the Centre for Gaming and Tourism Studies of Macao Polytechnic University, told GGRAsia that as China’s economic growth speeds up, people will in likelihood have more spending power when they travel, including trips made to Macau.
A number of investment analysts had already remarked that Chinese consumer demand in Macau had not been dampened by recent economic headwinds on the mainland.
About 40 percent of the 40.37 million outbound trips made by mainland Chinese tourists in the first six months of 2023 were to Macau, showed data from the China Tourism Academy, a research unit of the country’s Ministry of Culture and Tourism.
The UBS report stated: “With signs of global tech cycle bottoming, export volume may stop contracting. Meanwhile, Golden Week data suggested continued recovery in consumption.” The latter was a reference to eight days of a Chinese holiday season, this year from September 30 to October 6, and commonly called autumn Golden Week.
Macau logged nearly a million visitor arrivals in the Golden Week holiday period, according to official data. Nearly 76.1 percent of visitors, or 709,079, were from the Chinese mainland.
In its memo, UBS said that most of China’s economic activities in September “came in better than expected”, contributing to third-quarter GDP’s growth of 5.3 percent sequentially.
The memo noted that third-quarter retail sales growth “improved further on a low base and continued sequential increase,” and household income and consumption “recovered from the second quarter, with a small release of excess savings”.
Investment analysts and observers covering the Macau casino sector have previously noted that access to capital liquidity had been a driver of some demand for Macau gambling among mainland China consumers.
In comments to GGRAsia, academic Mr Siu stated: “If China’s economy gets stronger, people will have a greater amount of wealth from apartments, stocks and other investments and this would naturally boost their consumption when they travel.”
Given the state of global affairs, “the things that are directly under China’s control are to improve its internal consumption environment,” noted the scholar.
As such, it is likely that Macau would be able to keep its current level of monthly gross gaming revenue “until year-end,” suggested Mr Siu.
Macau’s September casino GGR stood at MOP14.94 billion (US$1.85 billion), according to official data. It took Macau’s GGR for the nine months to September 30 to about MOP128.95 billion, up 305.3 percent from the comparable 2022 period.
In its latest assessment, UBS said it expects China’s economy to grow 3.5 percent sequentially in the fourth quarter, and to be up 5.0 percent in year-on-year terms.
“We expect property activities to stabilise in the coming months but remain weak next year, leading to narrower declines … and less of a drag on growth in 2024.”
