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Department of Economics of University of Macau Announced
Macroeconomic Forecast for Macao 2012-2013
The Department of Economics of the University of Macau released its Macroeconomic Forecast
for Macao 2012 today (May 4). Macao’s economy has grown considerably in 2011. In the fourth
quarter of 2011, Macao’s real GDP increased by 17.5% year-on-year and attained at 72.9 billion
MOP. As a whole year, Macao’s real GDP grew by 20.7% and recorded 261.0 billion MOP
(Figure 1 and 2).
Figure 1: Gross Domestic Product
(Billion of 2009 MOP)
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50
40
30
20
10
0
2011q4
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2009q2
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Figure 2: Gross Domestic Product
(Year-on-Year Growth (%))
40
30
20
10
0
2011q4
2011q3
2011q2
2011q1
2010q4
2010q3
2010q2
2010q1
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The Economy in 2011
The following highlights the economic situations of different sectors in the fourth quarter of
2011:

External demand of services was pushed up by the economic growth in Macao’s major
markets --- Mainland China and Hong Kong. As these two economies continued to grow
steadily, the visitors from these markets would like to spend in Macao and particularly on
the gaming activities. In the fourth quarter of 2011, the exports of services were 77.9 billion
MOP, rose by 22.2% year-on-year. Meanwhile, the exports of services in gaming, the
largest portion of the exports of services, were 73.8 billion MOP, increased by 33.2%
year-on-year.

In the fourth quarter of 2011, the exports of goods, turned around from last few years,
increased by 7.7% year-on-year to 2.16 billion MOP. The export of textile products
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continued to go down 25.7% year-on-year and other non-textile goods went up 17.8%
year-on-year.

For the fourth quarter of 2011, the imports of goods rose by 30.4% year-on-year to 18.0
billion MOP and imports of services increased by 18.4% year-on-year to 21.4 billion MOP
respectively.

Within the imports of goods, consumer goods increased drastically by 43.2% year-on-year
in the fourth quarter of 2011 upon the strong growth in the consumer spending. Meanwhile,
raw material and semi-manufactures recorded a growth of rate 12.8% year-on-year. Capital
goods grew by 31.2% year-on-year with growth in equipment investment.

Local spending grew faster with better consumer sentiment. Private consumption
expenditure was 14.4 billion MOP, rose by 12.1% year-on-year in the fourth quarter of
2011. The household final consumption expenditure in domestic market and the expenditure
abroad increased by 10.6% and 10.9% respectively in that period.

Gross fixed capital formation recorded 15.8% year-on-year in the fourth quarter of 2011 to
10.3 billion MOP with the increase in public investment. However, total private gross fixed
capital formation declined by 10.6% year-on-year in the fourth quarter of 2011 with
construction investment declined by 11.9% year-on-year and equipment investment
decrease by 5.6% year-on-year respectively.

Consumer price is soaring amid higher local demand with increased import prices. The
Composite Consumer Price Index on March 2012 rose by 6.2% year-on-year. For the two
largest components of the Composite Consumer Price Index, food and non-alcoholic
beverages, and housing and fuel, their year-on-year growth rates were 9.5% and 4.6%
respectively (Figure 17). For the aggregate economy, in tandem with the high rise of
consumer price, the GDP deflator increased by 8.2% year-on-year in the fourth quarter of
2011.

Labour market has been tightened in 2011. Unemployment rate for the fourth quarter of
2011 was 2.1%, down 0.6 percentage point from the fourth quarter of 2010 (Figure 19).
Excluding the non-resident workers, the unemployment rate for local workers was 2.7%,
down by 0.6 percentage points from the fourth quarter of 2010.

The total employment was 339.8 thousand in the fourth quarter of 2011, up by 5.5%
year-on-year. Analyzed by industry, employment in manufacturing was 13.5 thousands,
down by 4.9% year-on-year reflecting the weakening in the exports of goods. Employment
in construction was 27.7 thousands, a small drop of 3.7% year-on-year along with the slow
down in private investment in building and construction. Employment in gaming industry
was 72.0 thousands, up by 11.7% year-on-year, amid the strong growth of the gaming
sector.
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
Median monthly earnings were 10,000 MOP in the fourth quarter of 2011, increased by
11.1% year-on-year. For the gaming sector which accounted for the largest share of the
employed population, median monthly earnings were 14,000 MOP, up by 7.7%
year-on-year. The median monthly earnings for the other major industries such as hotels &
restaurants were 7,600 MOP, up by 8.6% year-on-year while the median monthly earnings
for wholesales & retails were 8,300 MOP, up by 6.4% year-on-year.
Macroeconomic Forecast for 2012-2013
The remarkable Macao’s GDP growth in 2010 continued to 2011. However, Macao is facing
great uncertainty in 2012. According to the IMF forecasts on January 2012, global growth will
moderate to about 3.3% through 2012. U.S. GDP will be expected to expand 1.8% and the Euro
Area is likely to contract 0.5%. For Mainland China, the GDP growth rate has slowed down to
8.1% in the first quarter of 2012 compared double-digit growth in 2010 amid the Central
Government tries to control the inflation and global economy slows down. The Central
Government targeted 2012 annual growth to an eight-year low of 7.5 percent. This will affect
Hong Kong, another major market of Macao’s service exports, to have a more measurable
growth in 2012. Under this circumstance, Macao’s GDP is expected to grow by 18.0%, with
ranged from a pessimistic 11.5% to an optimistic 24.5% in 2012, according to the
Macroeconometric Structural Model of Macao.
Macao’s service exports, in particular, the gaming sector, grew extraordinarily in 2011. With a
more measurable growth in the major markets, the exports of services are expected to grow
26.7% in 2012 and 22.1% in 2013. The decline of exports of goods is expected to decelerate
continuously in 2012 with annual rate of 2.6% and with positive growth of 0.5% in 2012.
Concomitant with the moderate growth in the total exports and domestic demand in 2012 and
2013, the imports of goods and services are expected to grow by 24.6% and 30.2% respectively
in 2012. The growth will further slow down to 21.3% and 26.3% respectively in 2013.
For the domestic demand, private consumption spending grew strongly in 2011. It is expected to
grow resiliently at 8.3% in 2012 and 6.1% in 2013. Investment growth was respectable in 2011
after the recovery in the fourth quarter of 2010. Investment is expected to grow at 8.6% in 2012
and 6.7% in 2013 amid global economic uncertainty.
Inflation, as measured by the change in the Composite Consumer Price Index, was 2.8% in 2010
but ran high at 5.6% in 2011. The major reasons are strong demand from local residents and
foreign visitors and high imported prices for consumer products. The inflation in Mainland China
started to go down in November 2011. As a result, inflation rate in Macao is expected to come
down gradually to 5.5% in 2012 and 5.1% in 2013. For the aggregate economy, the GDP price
deflator is forecast to increase 6.4% in 2012 and 5.7% in 2013.
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The tight labour market in 2011 is expected to loosen slowly. Unemployment rate is forecast to
be 2.5% in 2012 and 2.7% in 2013. Excluded the non-resident workers, the unemployment rate
of local residents is expected to be 3.3% in 2012 and 3.5% in 2013. Median monthly earnings are
forecast to rise by 8.4% and 8.3% in 2012 and 2013 respectively.
About the Macroeconometric Structural Model of Macao
The Macroeconometric Structural Model of Macao is a quarterly simultaneous-equations
econometric model which currently includes 90 equations and 254 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.
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Table: Forecasts of Major Economic Variables
2008
2009
2010
2011
2012
2013
(Actual) (Actual) (Actual) (Actual) (Forecast) (Forecast)
Level
Gross Domestic Product (Billion of 2009 MOP)
167.3
170.2
216.2
261.0
308.0
352.4
Private Consumption Expenditure (Billion of 2009 MOP)
44.5
45.6
49.0
54.0
58.4
62.0
Gross Fixed Capital Formation (Billion of 2009 MOP)
47.1
31.9
26.5
30.4
33.0
35.2
Exports of Goods (Billion of 2009 MOP)
16.8
8.7
8.0
7.8
7.6
7.6
Exports of Services (Billion of 2009 MOP)
145.9
151.5
223.3
288.8
365.9
446.6
Imports of Goods (Billion of 2009 MOP)
57.1
43.3
49.8
62.8
78.3
94.9
Imports of Services (Billion of 2009 MOP)
46.8
41.1
60.1
78.4
102.1
128.9
GDP Deflator (2009 = 100)
99.4
99.9
104.5
111.7
118.8
125.6
CPI (Composite) (April 2008 - March 2009 = 100)
100.2
101.4
104.2
110.1
116.1
122.1
Median Monthly Earnings (MOP)
8,175
8,650
8,875
9,800
10,623
11,501
Employment (Thousand Persons)
322.8
317.4
318.2
332.4
352.3
364.1
Table (Continued) : Forecasts of Major Economic Variables
2008
2009
2010
2011
2012
2013
(Actual) (Actual) (Actual) (Actual) (Forecast) (Forecast)
Year-on-Year Growth Rate (%)
Lower
11.5
6.5
Gross Domestic Product
Baseline
3.3
1.7
27.0
20.7
18.0
14.4
Upper
24.5
22.4
Lower
6.5
3.9
Private Consumption Expenditure Baseline
5.2
2.4
7.5
10.2
8.3
6.1
Upper
10.0
8.3
Lower
-5.7
-9.7
Gross Fixed Capital Formation
Baseline
-14.8
-32.3
-16.8
14.5
8.6
6.7
Upper
23.0
23.2
Lower
-10.2
-9.4
Exports of Goods
Baseline
-22.0
-48.2
-7.3
-2.9
-2.6
0.5
Upper
5.0
10.4
Lower
20.5
14.8
Exports of Services
Baseline
14.6
3.9
47.4
29.4
26.7
22.1
Upper
32.9
29.3
Lower
18.7
13.5
Imports of Goods
Baseline
-8.4
-24.1
14.9
26.2
24.6
21.3
Upper
30.6
29.0
Lower
20.9
14.8
Imports of Services
Baseline
18.5
-12.3
46.2
30.5
30.2
26.3
Upper
39.5
37.8
Lower
4.9
3.3
GDP Deflator Growth Rate
Baseline
11.1
0.5
4.6
6.9
6.4
5.7
Upper
7.9
8.1
Lower
4.5
3.5
7
CPI (Composite) Inflation Rate
Median Monthly Earnings
Unemployment Rate
Unemployment Rate
(Local Residents)
Baseline
Upper
Lower
Baseline
Upper
Lower
Baseline
Upper
Lower
Baseline
Upper
8.6
1.2
2.8
5.6
5.2
5.8
2.6
10.4
3.0
3.6
2.8
2.5
3.8
4.4
3.5
3.2
8
5.5
6.4
5.8
8.4
11.0
2.2
2.5
2.9
2.8
3.3
3.8
5.1
6.8
3.2
8.3
13.3
2.1
2.7
3.3
2.7
3.5
4.3