IMF Upgrades Economic Prospects

By
Kelsey Wilhelm

The International Monetary Fund has forecast that MacauÂ’s Gross Domestic Product will contract by 4.7 per cent year-on-year for 2016 but rebound to 0.2 per cent growth in 2017.
The MSAR economy is predicted to contract for the rest of the year, seeing a 4.7 per cent year-on-year decrease in Gross Domestic Product (GDP) for 2016, according to the latest projections by the International Monetary Fund (IMF). However, this prediction shines a more positive light on the local GDP compared to the FundÂ’s April forecasts.
The latest estimates were released in the IMFÂ’s World Economic Outlook, October 2016 edition comprising a World Economic and Financial Survey conducted by IMF staff twice yearly on average.
In April, IMF predicted a 7.2 per cent year-on-year reduction in the local GDP.
In addition, IMF is projecting a lower GDP growth for 2017, adjusting from the initial forecast for a 0.7 per cent to a 0.2 per cent increase year-on-year.
Consumer
Meanwhile, the cityÂ’s consumer prices are expected to increase, according to the groupÂ’s projections, although not in line with the results seen in 2015, which hit annual average movements of 4.6 per cent.
The Fund is now projecting local inflation of 2.6 per cent year-on-year for 2016 and an increase to 2.8 per cent in the following year.
According to the most recently released data by the Statistics and Census Service (DSEC) the Consumer Price Index for August was at its lowest recorded growth since January 2010, at 1.65 per cent – so far this year CPI has averaged 2.83 per cent.
Employment
The unemployment rate is expected to remain stable at 1.9 per cent for this year, the same as in 2015, and increasing slightly in 2017, according to IMF predictions, to hit 2 per cent. If achieved, this would be the first time the unemployment rate had breached 1.9 per cent since the third quarter of 2012, according to DSEC data.
Accounts
In addition, according to IMF predictions, the current account balance for the MSAR is set to increase to 28.4 per cent of GDP, reaching 29.2 per cent for 2017, with far-future predictions for 2021 reaching 30.4 per cent, from 28 per cent in 2015. These predictions are far higher than the 2016, 2017 and 2021 predictions for April, which hit 20 per cent, 17.2 per cent and 24.5 per cent, respectively.
In the IMF classification of GDP the MSAR qualifies as an ‘Advanced Economy’ alongside countries such as Australia, Korea, Denmark and the SAR of Hong Kong.