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MSAR world’s fastest growing economy in 2012
Despite a sharp slowdown, Macau will be the world’s fastest growing economy this year according to the Economist Intelligence Unit (EIU).
The unit’s ‘World in 2012’ forecasts place the MSAR at the top of the ranking for economic growth. The Economist group believes the territory’s total wealth creation – known as Gross Domestic Product (GDP) – will grow by 15 percent in the year ahead.
While still ahead of other nations, this figure would represent a significant cooling for the local economy. For the first three quarters of 2011 GDP grew by 21.8 percent year-on-year in real terms, down from the 26.2 registered in 2010.
In November, during his 2012 Policy Address, the secretary for Economy and Finance said that local GDP would maintain double-digit growth throughout the year. But Francis Tam Pak Yuen warned that it would be “within a somewhat lower range”.
The EIU forecast puts Macau just ahead of Mongolia, with the country expected to grow by 14.8 percent in 2012. Next in the ranking come two oil-rich states bouncing back from years of war and internal conflicts: Libya (up 13.6 percent) and Iraq (10.9 percent).
More importantly for the territory, the EIU expects mainland China to grow by a healthy 8.2 percent this year, although the institution is worried about the country’s growing debt.
The anticipated slowdown in the Chinese economy could severely impact Macau, because the city’s main industries – gaming and tourism – rely heavily on mainland tourists. In addition the MSAR buys most of its staple goods from across the border.
The EIU forecast is also reassuring, considering that the business environment could turn sour due to “a potential worldwide economic recession,” as Francis Tam said last November.
When the 2008 global financial tsunami hit Macau the territory experienced a whole year of economic contraction until mid 2009, including a 10 percent drop in the second quarter of 2009.
The local economy boomed in 2010, but it was outside investors who had the best year, according to official data released last week.
Macau’s gross national income (GNI) at current prices amounted to MOP 201.9 billion in 2010, up by 25 percent in real terms. GNI is the total income earned by residents and it includes GDP and money flows coming in and out of the territory.
And in 2010 the GNI was lower than the GDP (MOP 226.3 billion), which means that outside investors earned more money from Macau than the one local investors made from abroad.
Income earned by non-resident investors increased by 35 percent due to a surge in profits from direct investment. On the contrary, income from residents declined by 5.4 percent.
The data released by the Statistics and Census Services also confirms casinos as the city’s dominant industry. Gaming’s contribution to the local economy – known as gross value added – accounted for 40.9 percent, up from 32 percent in 2009.
On the contrary, the manufacturing and construction sectors continued to loose importance in Macau’s economy. In 2010 the construction industry only accounted for 5.5 percent of the gross value added, down from 8.1 percent, while manufacturing dropped to less than two percent.
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