Macao’s gross domestic product (GDP) could drop by up to 29 per cent this year, according to the latest research by the University of Macau (UM).
The university’s annual forecast of Macao’s economy is conducted by a research team consisting of economists from the Department of Economics. The GDP forecast project is administered by the university’s Centre for Macao Studies.
The research team initially predicted in January that Macao’s economy would grow between 3.6 per cent and 37.9 per cent this year.
However, the team has revised its forecast on Macao’s GDP because the city was hard hit by the summer Covid-19 outbreak, and the government is still implementing extremely strict entry curbs for arrivals.
According to official figures, Macao’s GDP dropped 8.9 per cent and 39.3 per cent year-on-year in this year’s first quarter and second quarter respectively in real terms.
UM’s researchers said that Macao’s economy faced serious challenges in the first half of this year. During the first quarter, which saw a year-on-year GDP decrease of 8.9 per cent, the government “was forced to maintain stringent travel restrictions” due to different levels of Covid-19 outbreaks or local transmissions in neighbouring regions. During the second quarter, a massive Covid-19 outbreak around the middle of June resulted in a sharp decline in Macao’s second-quarter GDP, a year-on-year drop of 39.3 per cent.
From the middle of June to the end of July, the government carried out 14 rounds of citywide Covid-19 nucleic acid tests (NATs), and imposed “relatively static” restrictions on people’s movements and operations of businesses in July, which lasted 12 days.
The government’s stringent Covid-19 measures implemented during the summer outbreak restricted normal business life so the city’s economy continued to deteriorate.
Researchers said that when the team made its economic forecast early this year, it assumed that Macao would “gradually reopen its border” for arrivals this year, after considering the city’s increasing Covid-19 vaccination rate and other countries and regions’ experiences in gradually reopening their borders. The team assumed that in case Macao was hit by one or more Covid-19 outbreaks this year, the city’s GDP would remain at around the same level as last year in the worst-case scenario.
Due to the highly transmissible Omicron variant, the government has continued to implement strict Covid-19 measures, obviously stricter than the assumptions made by the research team early this year.
The research team noted that Macao is a tourist destination, adding that if the government maintains “excessively stringent travel restrictions”, it would be difficult for tourists to “enjoy the services provided by enterprises and workers” here. As a result, it would be difficult for Macao’s economy to continue to develop normally without sufficient tourism revenues.
The researchers said that the government’s various financial support measures that have been rolled out since the start of the Covid-19 pandemic in early 2020 have only been able to relieve residents’ and businesses’ financial difficulties in the short term and in a limited way, adding that such financial support measures “cannot replace” businesses’ revenues and residents’ incomes generated through normal market operations.
The researchers concluded that due to the current “constraints” that Macao is facing, including how to come up with a suitable set of Covid-19 prevention and control measures, society cannot see clear prospects for continued economic recovery, and “effective” economic recovery may be “a long way off”, The Macau Post Daily reported.