The University of Macau (UM) announced yesterday that it has revised its forecast on Macau’s 2022 gross domestic product (GDP), and it now estimates that the city’s economy will drop between 26.4 percent and 29.2 percent this year.

The public university announced the revised forecast in a statement yesterday. The university’s annual forecast on Macau’s economy is carried out by a research team consisting of economists from the Department of Economics. The GDP forecast project is administered by the university’s Centre for Macau Studies (CMS).

The research team initially predicted in January this year that Macau’s economy would grow between 3.6 percent and 37.9 percent this year.

According to yesterday’s statement, the research team has revised its forecast on Macau’s GDP for this year due to the fact that Macau was hard hit by its latest COVID-19 outbreak that began on June 18, and because of the fact that the Macau government is still implementing COVID-19 entry curbs for arrivals that are stricter than the assumptions made by the research team early this year.

According to official figures, Macau’s GDP dropped 8.9 percent and 39.3 percent year-on-year in this year’s first quarter and second quarter respectively in real terms.

The latest COVID-19 outbreak, also known in Chinese as 618 outbreak, started to subside in late July.

Yesterday’s statement said that Macau’s economy faced serious challenges in the first half of this year. During this year’s first quarter, which saw a year-on-year GDP decrease of 8.9 percent, the statement said, the Macau 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, the statement said, a massive COVID-19 outbreak commenced in Macau at around the middle of June, resulting in a sharp decline in Macau’s second-quarter GDP, a year-on-year drop of 39.3 percent.

The statement noted that from around the middle of June to the end of July, the Macau 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 statement went on to say that the local government’s stringent COVID-19 measures implemented during the 618 outbreak prevented various daily activities in civil society from being carried out, because of which, the statement said, Macau’s economy continued to deteriorate at that time.

Yesterday’s statement said that when the research team made its forecast early this year on Macau’s economy for 2022, it assumed that Macau would “gradually reopen its border” for arrivals this year, after considering Macau’s increasing COVID-19 vaccination rate and other countries and regions’ experiences in gradually reopening their borders. According to yesterday’s statement, the research team assumed early this year that in case Macau would be hit by one or more than one local COVID-19 outbreak this year, the city’s GDP this year was predicted to remain at around the same level as last year in the worst-case scenario.

Yesterday’s statement said that due to the highly transmissible Omicron variant, the Macau government has been continuing to implement strict COVID-19 measures, obviously stricter than the assumptions made by the research team early this year.

According to yesterday’s statement, the research team notes that Macau is a tourist destination, adding that if the Macau government maintains “excessively stringent travel restrictions”, it would be difficult for tourists to visit Macau to “enjoy the services provided by enterprises and workers” here. The statement said that it would be difficult for Macau’s economy to continue to develop normally without sufficient tourism revenues.

Yesterday’s statement said that the Macau 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 statement said that due to the current “constraints” that Macau is facing, including how to come up with a set of COVID-19 prevention and control measures suitable for Macau’s reality, Macau’s civil society cannot see clear prospects about Macau’s continuous economic recovery, adding that an “effective” economic recovery in Macau may be “a long way off”.

This file photo taken in late July shows several people walking near the Ruins of St Paul’s. – Photo: Rui Pastorin