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International Monetary Fund. Asia and Pacific Dept

regard, the gaming operators’ recent reduction in non-gaming prices—the tourism price index has fallen by 13 percent due primarily to reductions in hotel prices—illustrates an important flexibility. 27. Authorities Views . The authorities continue to view the currency board as a critical part of the stability of the Macao SAR economy. They felt that a robust policy framework, in particular with respect to fiscal policy and strong external buffers, had provided the needed credibility for the exchange rate regime to be a lasting nominal anchor. The authorities

International Monetary Fund. Asia and Pacific Dept
This 2019 Article IV Consultation highlights that while more moderate than in the past, gaming and tourism revenue in Macao Special Administrative Region picked up as the economy returned to expansion since mid-2016. Progress with diversification towards mass-gaming and nongaming tourism, together with the continued China gaming monopoly, are expected to deliver growth of around 4 percent in the medium term. Risks are tilted to the downside, mainly emanating from Mainland China. Prudent macroeconomic policies and high reserves provide strong buffers against shocks. In addition to supporting diversification, fulfilling social needs, and maintaining macroeconomic stability, the policies priorities explained in the report will reduce external imbalances. The report also discusses that the current housing macroprudential stance and related fiscal measures appear broadly appropriate. A broader set of policies are advised to support housing affordability, where continued efforts to boost housing supply will be key.
International Monetary Fund. Asia and Pacific Dept

In recent years, the Macao SAR economy contracted by a cumulative 30 percent due to a sharp fall in spending by gaming tourists from Mainland China. Spillovers to the rest of the economy were relatively contained with unemployment staying under 2 percent and asset quality in the financial sector unaffected. Nonetheless, the size and speed of the shock underscored the need to transition to a more diversified economic model going forward. Fortunately, Macao SAR is entering this transition from a position of strength with large fiscal and external buffers.

International Monetary Fund. Asia and Pacific Dept

In recent years, the Macao SAR economy contracted by a cumulative 30 percent due to a sharp fall in spending by gaming tourists from Mainland China. Spillovers to the rest of the economy were relatively contained with unemployment staying under 2 percent and asset quality in the financial sector unaffected. Nonetheless, the size and speed of the shock underscored the need to transition to a more diversified economic model going forward. Fortunately, Macao SAR is entering this transition from a position of strength with large fiscal and external buffers.

International Monetary Fund. Asia and Pacific Dept

authorities’ intention to publish the staff report. Economic development and outlook Between 1999 and 2013, the Macao SAR economy experienced a compound growth rate of 11.8 percent per annum. The slowest growth rate of 1.7 percent was in 2009 due to the global financial crisis, but it rebounded strongly with a record-high growth of 27.5 percent in the subsequent year. This pattern of relatively large swings in growth was shared by some emerging market economies. Since 2010, the Macao SAR economy has grown strongly and consistently. Real GDP rose by 11.9 percent in

International Monetary Fund. Asia and Pacific Dept

92780 • Washington, D.C. 20090 Telephone: (202) 623-7430 • Fax: (202) 623-7201 E-mail: publications@imf.org Web: http://0-www-imf-org.library.svsu.edu Price: $18.00 per printed copy International Monetary Fund Washington, D.C. © 2017 International Monetary Fund Front Matter Page PEOPLE’S REPUBLIC OF CHINA—MACAO SPECIAL ADMINISTRATIVE REGION STAFF REPORT FOR THE 2016 ARTICLE IV CONSULTATION DISCUSSIONS January 18, 2017 Key Issues Context . In recent years, the Macao SAR economy contracted by a cumulative 30 percent due to a sharp fall in

International Monetary Fund. Asia and Pacific Dept

’ intention to publish the staff report. Economic updates and outlook The Macao SAR economy has swiftly rebounded since mid-2016, following a two-year consolidation in 2014–16. Boosted by the strengthening of external demand, real GDP grew sturdily by 9.7 percent in 2017 and further by 7.6 percent in the first half of 2018. Nevertheless, the growth momentum decelerated to 2.0 percent in the second half of 2018, attributed to weaker investment and slowdown in service exports growth. For 2018 as a whole, the economy witnessed a growth rate of 4.7 percent. Nominal GDP

International Monetary Fund. Asia and Pacific Dept
KEY MESSAGES Setting. Discussions took place for the first time since the handover of Macao SAR from Portugal to China in 1999. Prudent macroeconomic management has underpinned rapid development in the territory, which is now the world’s largest gaming center. As a small, open and tourism-dependent economy, Macao SAR is currently also benefiting from loose global monetary conditions and a Mainland-related boom. Outlook and risks. Growth should stay strong over the next few years at 8–10 percent buoyed by gaming exports and investment, with inflation remaining around 5–5½ percent. However, the economy is vulnerable to external shocks, in particular a slowdown in tourism, due to shocks in the Mainland or Hong Kong SAR or other setbacks to the global recovery. The buoyant property market could also correct if demand fundamentals shift or interest rates rise abruptly with the withdrawal of unconventional monetary policy abroad. Macroeconomic policies. The policy stance is appropriate, with scope for further tightening of macroprudential policies should property prices continue to rise sharply. If downside risks materialize, targeted fiscal stimulus should be used to buttress growth. In the event of a severe property downturn, some countervailing measures could be cautiously unwound. The currency board is the best arrangement for Macao SAR. Financial stability. Important progress has been made in strengthening financial stability in line with the 2011 FSAP recommendations. Prudential measures should focus on managing potential credit and liquidity risks from a gaming slowdown and the property sector, as well as spillovers from shocks in the Mainland and Hong Kong SAR. Longer term challenges. Looking further ahead, Macao SAR’s public finances face a moderation in gaming revenues juxtaposed against spending needs from population aging. A sovereign wealth fund to manage part of the territory’s fiscal reserves and medium-term budgeting could therefore be useful. As the gaming sector matures, economic diversification toward other services will be key for stable growth.
International Monetary Fund. Asia and Pacific Dept
This 2016 Article IV Consultation highlights that the real output for Macao Special Administrative Region (SAR) is expected to contract for a third consecutive year in 2016. However, external demand has begun to recover with gaming revenues posting six consecutive months of positive annual growth. In 2017, a low base will help increase growth above 2 percent despite continued weak domestic demand. Further out, Macao SAR is well-positioned to record sustainable growth in the mid-single digits. In addition to its still highly valuable gaming monopoly within China, Macao SAR is an established tourist destination with significant geographic proximity to Mainland China. Macao SAR is now also investing aggressively in non-gaming tourism and financial services.