Rebounds in the export of services and investment have led to the first quarter growth in real gross domestic product (GDP) in over two years, according to the most recent third quarter data from the Statistics and Census Service (DSEC).
GDP expanded by 4 per cent in real terms year-on-year in the quarter, driven by an increase in external demand while private consumption resumed growth, in part driven by increases in employee compensation, and a rebound in investment.
Exports and imports
A pickup in exports was most evident in the 6.5 per cent year-on-year increase in non-gaming tourism services, while the export of gaming services increased 0.2 per cent year-on-year in the third quarter, contrasting the 9.9 per cent and 6 per cent decreases in the sectors seen in the second quarter, respectively.
Overall, the export of goods declined 15.6 per cent year-on-year in the third quarter, in contrast to the 24.7 per cent fall seen in the previous quarter.
Additionally contributing to the merchandise trade decline was a continuation of a decline in the import of goods, which moderated to a 7.3 per cent fall year-on-year vis-à-vis 17 per cent recorded in the second quarter.
Meanwhile, driven by increased visitor arrivals and spending, the export of services grew 3.3 per cent year-on-year in the same period, the first year-on-year growth seen since the 1.6 per cent growth recorded in the second quarter of 2014.
The import of services reversed the 2016 trend, with a 6.2 per cent year-on-year growth in the third quarter, contrasting declines of 3.1 per cent and 6.3 per cent in the previous quarters.
Reversing the trend
Private consumption increased 0.3 per cent year-on-year in the quarter, reaching MOP23.8 billion (US$3 billion), reversing the previous year-on-year declines seen so far this year. Expenditure on non-durable household goods fell 17.3 per cent year-on-year, demonstrating cautious household spending, with a 5.5 per cent fall in consumer goods consumption year-on-year. Food, beverages and tobacco, however, saw a 2.3 per cent increase year-on-year in private consumption spending. Private consumption abroad picked up 4.5 per cent year-on-year in the third quarter.
Government expenditure fell by 1.3 per cent year-on-year, lower than the 6.1 per cent registered in the second quarter, however, driven in part by a 4.9 per cent year-on-year decrease in the net purchase of goods and services. Government compensation of employees increased 2.2 per cent year-on-year.
Investment, gauged by gross fixed capital formation, grew 2.3 per cent year-on-year, rebounding from a 20 per cent year-on-year drop seen in the previous quarter. Increases in private investment in construction and equipment saw year-on-year increases of 1.3 per cent and 11.2 per cent, while government investment in the same categories fell 0.1 per cent and increased 17.5 per cent, respectively.
For the first three quarters of the year, the local economy contracted 5.4 per cent in real terms. In terms of major components of expenditure, only government final expenditure consumption registered growth during the three quarters, while investment fell 18.1 per cent, private consumption expenditure fell 1.6 per cent, exports of goods fell 22 per cent, imports of goods fell 15.4 per cent and the export and import of services decreased 5.8 per cent and 1 per cent, respectively, year-on-year.
