IMF: MSAR mid-term outlook strong

The International Monetary Fund (IMF) expects the city’s medium-term outlook to remain strong following the MSAR economy is moving towards less volatility, observed a press release by the Fund on Tuesday.
A team from the Fund, led by Geoff Gottlieb, visited the MSAR between November 3 and 14. According to the release, the visit sought to conduct discussions on the review of the city’s economy with the Monetary Authority of Macau.
“The medium-term outlook for Macau SAR remains strong,” said Mr. Gottlieb at the end of the visit. “Although the economy will contract for a third consecutive year in 2016, external demand has begun to recover with three consecutive months of positive gaming revenue growth.”
He added that the city is well positioned for stable and sustainable growth in the low  to mid-single digits.
“The Macau SAR economy has started an important transition […] the authorities have embraced the opportunity to move towards an economic model with less volatile and more sustainable sources of income,” he added.
The IMF officer also noted the MSAR Government is correct in its Five-Year Plan to diversify “from VIP to mass market gaming, from gaming to non-gaming tourism and from tourism to financial services exports”.
“With respect to tourism, the single biggest priority is ensuring that public sector infrastructure investment is adequate in both quality and quantity to accommodate further increases in external demand: the move from VIP to mass market tourists inevitably requires additional capacity to achieve the same amount of growth,” the officer said.
On the other hand, the Fund notes the MSAR Government needs to do more “granular work” to establish the extent of the city’s current competitive advantage, in addition to policy chances, especially those relating to offshore activities such as leasing and wealth management, to succeed.
“Attracting the necessary non-resident investors and professionals may require considerable cuts in tax rates and substantial increases in supervision,” the officer said.
“To increase the likelihood that such costs are merited, the authorities should seek to maximise spill-over benefits to local employment with well targeted government training programmes and educational investment,” he said.
On price correction in the housing market, the officer advised the authorities to facilitate additional housing supply at market price rather than subsidised prices.
“The authorities could also explore the scope for tighter loan-to-value ratios on second home purchases if speculative demand is of concern,” he said.