Macau’s gross domestic product (GDP) contracted by 13.3 percent year-on-year in real terms in the first quarter of 2016, according to data released on Monday by the city’s Statistics and Census Service, known from its Portuguese acronym as DSEC.
The contraction was “mainly due to the continuous decline in exports of services and decrease in investment,” said the bureau.
Exports of gaming services dropped by 17.1 percent year-on-year terms. Gaming services in Macau are included in exports when calculating the city’s GDP. That is in order to reflect expenditure by tourists in the city’s casinos.
In the first quarter of 2016, gaming services were equivalent to more than 52 percent of Macau’s GDP at current prices.
It had been reported on April 1 by the city’s casino regulator, the Gaming Inspection and Coordination Bureau, that total casino gross gaming revenue (GGR) for the first three months of 2016 had contracted by 13.3 percent year-on-year.
Macau’s GDP has been declining since the third quarter of 2014 measured in year-on-year terms.
DSEC said in its Monday statement that a decrease in visitor spending in the first quarter brought exports of other tourism services down by 11.0 percent.
The statistics bureau noted the Macau government’s final consumption expenditure was the only expenditure component in the economy that registered growth in the first quarter. It expanded by 1.5 percent year-on-year.
The bureau said that in the three months to March 31, domestic demand slackened, with private consumption expenditure declining by 2.3 percent, while investment and imports of goods shrank by 31.4 percent and 19.9 percent respectively. Net purchases of goods and services dropped by 1.0 percent.
In the same period, compensation of employees in Macau rose by 3.1 percent.
“Despite the prevailing favourable employment conditions, pay growth remained subdued, dragging down private consumption expenditure,” said DSEC. Household final consumption expenditure in the domestic market fell by 2.3 percent while that abroad rose by 3.9 percent.
DSEC had said in a press release on Friday that Macau’s unemployment rate and underemployment rate for February to April 2016 had remained stable at 1.9 percent and 0.5 percent respectively – the same percentages registered in the market in the January to March period.
DSEC said in its Monday release that in the first quarter, private investment in construction and equipment diminished by 35.0 percent and 18.9 percent respectively, bringing total private investment down by 33.0 percent, which it said was “attributable to the slowdown in construction of major tourism and entertainment facilities, as well as the high comparison base last year driven by construction”.
Government investment decreased by 5.5 percent year-on-year in the first quarter, of which public construction investment fell by 6.5 percent while equipment investment grew by 91.1 percent.
Moody’s Investors Service Inc, a credit rating agency, said in a note on May 25 it had downgraded Macau’s government debt issuer rating to Aa3 from Aa2 and assigned it a negative outlook.
“The rating downgrade reflects Moody’s view that the sharp weakening in the economy, with growth remaining highly volatile, coupled with the limited policy response to the fall in gaming revenues, leave Macau’s credit profile weaker than those of Aa2 peers,” the firm stated in a release.
In a statement on May 25 regarding the rating downgrade by Moody’s, the Monetary Authority of Macao said that the city’s “economic and financial conditions are fundamentally sound and [Macau] is able to deal with fluctuations.”
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