MACAO ECONOMIC BULLETIN

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MACAO ECONOMIC BULLETIN

This is a joint publication of the Macao Economic Services (DSE), the Monetary Authority of Macao (AMCM) and the Statistics and Census Service (DSEC). DSE prepares the analysis of the World Economy and External Merchandise Trade, as well as data on tables I.1, I.2, II.7 and II.8. AMCM prepares the analysis of Money and Finance and data on tables VIII.1 to VIII.7. DSEC prepares the analysis and data on the remaining sections.

Further information can be obtained from the Documentation and Information Centre of DSEC.

Reproduction of these data is allowed provided the source is quoted.

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Quarter

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Editor: DSEC

Macao, October 2015

Typesetting and design: DSEC Printing: DSEC

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THE WORLD ECONOMY

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Global economic growth slowed in the second quarter of 2015. The US economy grew at a steady pace, the Euro area continued to recover while the economy of Japan was in the doldrums. With volatile oil prices, global trade weakening amid a slowdown in emerging markets and developing economies, as well as the prospect of US hiking interest rates, risks to global economic activity remained tilted downwards. The World Economic Outlook (WEO) Update of the International Monetary Fund (IMF) in July 2015 indicated that advanced economies gradually picked up while emerging markets and developing economies slowed down. The world economy is projected to grow by 3.3% in 2015, down by 0.2 percentage points from the April forecast; the growth projection for 2016 remains unchanged at 3.8%.

The US economy maintained steady growth in the second quarter, with Gross Domestic Product (GDP) rising by 2.7% year-on-year and 3.7% quarter-to-quarter. The expansion was mainly spurred by the increase in private consumption expenditure, contributing 2.1 percentage points to the economic growth; fixed investment and exports contributed 0.7 percentage points each to the increase and government expenditure added 0.5 percentage points; however, rising imports lowered the growth rate by 0.4 percentage points. The unemployment rate decreased by 0.5 percentage points quarter-to-quarter to 5.3%; the seasonally adjusted unemployment rate stood at 5.4%.

Economic recovery in the Euro area remained stable, with steady growth in the German and French economies. The second quarter GDP increased by 1.5%

year-on-year and 0.4% quarter-to-quarter. Exports and consumption expenditure of households and non-profit institutions contributed 0.7 and 0.2 percentage points respectively to the economic growth; yet, imports dragged down the increase by 0.4 percentage points while gross fixed capital formation and inventory tapered off the growth rate by 0.1 percentage point each. The unemployment rate declined by 0.7 percentage points quarter-to-quarter to 10.9%.

The UK economy saw steady growth, with the second quarter GDP rising by 2.6%

year-on-year and 0.7% quarter-to-quarter. Net exports was the main driver of economic growth, contributing 1.0 percentage point to the increase. Household final consumption expenditure and government expenditure added 0.4 and 0.2 percentage points respectively to the growth; however, gross fixed capital formation dragged down the increase by 0.9 percentage points. The unemployment rate edged up by 0.1 percentage point quarter-to-quarter to 5.6%.

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that the ASEAN 5 economies^a are projected to expand by 4.7% in 2015, down by 0.5 percentage points from the April forecast; the projection for the Middle East, North Africa, Afghanistan and Pakistan is lowered by 0.3 percentage points to 2.6%; China and India are projected to grow by 6.8% and 7.5%, same as the April forecast.

The second quarter GDP of Japan rose by 0.7% year-on-year but contracted by 0.4%

quarter-to-quarter. Sluggish exports dragged down the economic growth by 0.8 percentage points. Domestic demand lowered the increase by 0.1 percentage point upon a decrease in private consumption expenditure; yet, decline in imports offset the negative impact to growth by 0.5 percentage points. The unemployment rate stayed unchanged at 3.5%; the seasonally adjusted rate was 3.3%, down by 0.2 percentage points.

The economy of the Republic of Korea was greatly dragged down by the Middle East respiratory syndrome (MERS) outbreak. GDP for the second quarter increased by 2.2%

year-on-year and 0.3% quarter-to-quarter, marking growth of less than 1.0% for 5 consecutive quarters. Gross capital formation contributed 0.6 percentage points to the economic growth while weakened exports added a mere 0.1 percentage point to the increase; yet, private consumption expenditure dragged down the economic growth by 0.1 percentage point. The unemployment rate decreased by 0.3 percentage points quarter-to-quarter to 3.8%.

In Mainland China, GDP for the second quarter expanded by 7.0% year-on-year, same as the previous quarter. In the first half of 2015, value added of the above-scale industries rose by 6.3% year-on-year, down by 0.1 percentage point compared with the first quarter; fixed asset investment increased by 11.4% year-on-year, down by 2.1 percentage points; retail sales of consumer goods rose by 10.4% year-on-year, down by 0.2 percentage points, of which sales of communication equipment increased by 37.0%, construction and decoration materials by 17.4% and furniture by 16.5%. Total value of external trade for the first half of 2015 decreased by 6.9% year-on-year and the trade surplus amounted to USD263.3 billion. Inflation was stable as Consumer Price Index (CPI) for the second quarter increased by 1.3%, with the CPI for June rising by 1.4%

year-on-year.

Economic growth in Hong Kong sped up slightly in the second quarter of 2015, expanding by 2.8% year-on-year and 0.4% quarter-to-quarter, which was mainly driven by domestic demand. Gross fixed capital formation rose by 6.5% year-on-year, with building and construction projects saw notable increase while machinery and equipment acquisition continued to grow. Private consumption expenditure strengthened, rising by 6.0%

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year-on-year; government consumption expenditure maintained steady growth, up by 3.3%. Unsteady external environment continued to affect the trade performance of Hong Kong; merchandise exports declined by 3.6% year-on-year while exports of services rose by 1.0%. The unemployment rate edged up by 0.1 percentage point to 3.3%, and the seasonally adjusted rate was 3.2%.

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ANALYSIS OF THE MACAO ECONOMY

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I. Overview

In the second quarter of 2015, the economy of Macao continued to undergo adjustment, shrinking further by 26.4% year-on-year in real terms as against the 24.5%

drop in the first quarter, which was mainly due to stagnant exports of services. In terms of external demand, exports of services was dragged down by the accelerating decline in exports of gaming services and a notable drop in exports of other tourism services. As regards domestic demand, rising private consumption expenditure and government final consumption expenditure, together with an increase in private investment, reduced the magnitude of economic contraction. The economy contracted by 25.4% in real terms for the first half year of 2015.

The following highlights year-on-year comparisons of major segments of the local economy in the second quarter and the first half year of 2015:

1. Total external merchandise trade (exports plus imports) declined along with economic adjustment. Total value of merchandise exports increased by 8.2% in the second quarter. However, total value of merchandise imports decreased by 3.9% as imports of consumer goods, which took up a significant share of the total, dropped by 11.3%

upon declining visitor arrivals and visitor spending; nevertheless, imports of raw materials & semi-manufactures and capital goods increased by 17.2% and 12.5%

respectively. Total merchandise trade shrank by 2.6%, with a visible trade deficit of MOP17.66 billion. For the first half year of 2015, total merchandise trade increased by 0.4%; merchandise exports grew by 8.7% while merchandise imports fell by 0.5%, with the visible trade deficit amounting to MOP37.14 billion.

2. Decline in exports of gaming and tourism services accelerated. With the continuous adjustment of the gaming sector, gross gaming revenue decreased by 37.4% in the second quarter; in addition to the effect of inflation, exports of gaming services declined further by 40.5%. Visitor arrivals dropped by 3.3% and exports of other tourism services fell by 21.5%. Exports of services contracted further by 35.9% upon the simultaneous decline in exports of gaming and tourism services; meanwhile, imports of services dropped by 35.5%. For the first half year of 2015, gross gaming revenue declined by 36.9%, visitor arrivals dropped by 3.5% and guests of the hotel sector fell by 8.1%, causing exports of services to drop by 35.7% in real terms;

imports of services decreased by 36.8% in real terms.

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employment conditions; median monthly employment earnings increased by 15.4%.

High manpower demand drove non-resident workers up by 16.2% year-on-year to 180,523 at the end of the second quarter. The Composite Consumer Price Index (Composite CPI) rose by 4.8%, with price increase slowing and inflationary pressures easing. Private consumption expenditure and government final consumption expenditure expanded by 2.0% and 5.7% respectively. For the first half year of 2015, the Composite CPI grew by 4.9%; private consumption expenditure and government final consumption expenditure went up by 4.3% and 6.2% respectively.

4. Private investment maintained growth, but at a much lower rate. Despite the construction of large-scale tourism and entertainment facilities underway, private investment increased modestly by 1.6% in the second quarter of 2015 due to the relatively large base of comparison in the same quarter of 2014, of which construction investment rose by 3.1% while equipment investment dropped by 8.3%. Public investment grew by 36.0%. Number of new incorporations decreased by 11.0% and the value of registered capital went down by 67.7%. Overall investment in the first half year of 2015 increased by 13.2%; number of new incorporations rose by 6.6% but the value of registered capital went down by 60.6%.

5. Property transactions went up in the second quarter with prices generally higher than the first quarter. Number and value of building units purchased and sold increased by 63.7% and 78.5% respectively quarter-to-quarter. The average transaction price of residential units went up by 6.5% quarter-to-quarter.

6. The fiscal balance remained in surplus. Total government revenue and expenditure amounted to MOP26.76 billion and MOP18.13 billion respectively in the second quarter. Fiscal surplus for the second quarter stood at MOP8.63 billion, down by 66.0% year-on-year and 48.6% quarter-to-quarter, due to a 38.2% drop in tax revenue from gaming (86.4% of total revenue). For the first half year of 2015, total government revenue declined by 33.7% while total expenditure increased by 30.0%, with the fiscal surplus amounting to MOP25.42 billion.

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II. Major Segments of the Economy

A. External Merchandise Trade

Overview

External merchandise trade totalled MOP23.16 billion in the second quarter of 2015, down by 2.6%. Merchandise imports decreased by 3.9% to MOP20.41 billion, while merchandise exports rose by 8.2% to MOP2.75 billion. The exports-imports ratio increased by 1.5 percentage points year-on-year to 13.5%. Merchandise trade deficit narrowed from MOP19.48 billion in the first quarter of 2015 to MOP17.66 billion.

Total Exports

Merchandise exports increased by 8.2% year-on-year to MOP2.75 billion in the second quarter of 2015, of which domestic exports dropped by 18.1% while re-exports rose by 14.8%.

Analysed by destination, value of merchandise exports to Japan (MOP63.4 million), Mainland China (MOP459.2 million), Hong Kong (MOP1.68 billion) and the EU (MOP76.8 million) increased by 54.1%, 14.9%, 10.8% and 9.2% respectively; meanwhile, exports to Vietnam (MOP0.7 million), Taiwan (MOP14.2 million) and the USA (MOP38.1 million) decreased by 68.9%, 63.3% and 51.1% respectively.

Exports of clocks & watches, electronic components, other products and diamond &

diamond jewellery increased by 39.5%, 34.4%, 30.6% and 7.0% respectively; exports of machines, apparatus & parts (MOP271.7 million) declined by 47.6%, with its relative importance in total exports falling to 9.9%. Meanwhile, exports of tobacco & wine, copper &

articles thereof, and garment & textile products decreased by 20.9%, 5.5% and 1.0%

respectively.

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Domestic Exports

Domestic exports amounted to MOP417.6 million (15.2% of total exports) in the second quarter, down by 18.1% year-on-year and 17.2% quarter-to-quarter. Hong Kong continued to be the largest market of Macao’s domestic exports (40.5% of total domestic exports), but the value of exports declined by 19.1% year-on-year; moreover, domestic exports to the USA and the EU decreased by 52.6% and 2.9% respectively, while exports to Mainland China increased by 11.6%. Analysed by principal commodities, exports of garment (6.6% of total domestic exports) decreased further by 57.3%, of which exports to the USA (27.3% of total domestic exports of garment) tumbled by 58.3% and exports to the EU (60.7%) dropped by 52.7%; meanwhile, exports of tobacco & wine (20.0% of total domestic exports) declined by 24.8% and exports of other products (73.5%) also dropped by 8.4%.

Nevertheless, domestic exports to Mainland China rose by 11.6% to MOP76.8 million (18.4% of total domestic exports), of which tariff-free merchandise exports under the Mainland and Macao Closer Economic Partnership Arrangement (CEPA) decreased by 25.9% to MOP20.8 million, consisting mainly of copper-clad boards (95.0% of total) and stationery (2.6%); the amount of tariff saved totalled MOP0.9 million.

In addition, results of the Industrial Exports Survey for the second quarter of 2015 indicated that the average length of time of orders on hand of the interviewed manufacturers was 3.3 months, up by 37.7% from 2.4 months in the same quarter of 2014.

Meanwhile, 20.4% of the enterprises expressed optimism about the domestic industrial exports in the coming six months, up by 2.4 percentage points quarter-to-quarter but down

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by 0.2 percentage points year-on-year, with 0.1% anticipating a substantial increase and 20.3% expecting a modest rise. However, 12.4% expected less promising prospects of exports, down by 0.3 percentage points quarter-to-quarter and 7.0 percentage points year-on-year; moreover, 67.2% expected the outlook of exports remained stagnant, down by 2.2 percentage points quarter-to-quarter but up by 7.2 percentage points year-on-year.

The findings showed that the manufacturers were generally cautious about the outlook of exports.

Re-exports

Total value of re-exports rose by 14.8% to MOP2.33 billion (84.8% of total exports) in the second quarter of 2015. Hong Kong was the largest market of Macao’s re-exports (64.9% of total), which was followed by Mainland China (16.4%). Value of re-exports to Hong Kong and Mainland China increased by 15.6% and 15.5% respectively. In terms of the types of commodities, re-exports of consumer goods (53.1% of total) and raw materials

& semi-manufactures (7.3%) increased by 45.5% and 45.1% respectively, whereas re-exports of other products (39.6%) declined by 13.1%.

Imports

Value of merchandise imports decreased by 3.9% year-on-year to MOP20.41 billion in the second quarter of 2015, due to the decline of 20.1%, 27.2% and 8.8% in imports from the EU (21.1% of total), Hong Kong (7.5%) and Switzerland (8.6%). Mainland China was the main supplier of goods imported to Macao and the value of imports rose by 7.6% to MOP7.50 billion (36.8% of total). Value of imports from the USA (6.4%), Taiwan (1.7%) and Japan (6.4%) expanded by 15.1%, 4.7% and 1.3% respectively.

Regarding the types of commodities, imports of raw materials & semi-manufactures (13.4% of total) and capital goods (19.3%) increased by 17.2% and 12.5% respectively;

however, imports of consumer goods (58.5%) and fuels & lubricants (8.8%) decreased by 11.3% and 7.4% respectively.

Imports of consumer goods declined further, of which gold jewellery (7.4% of total imports), light passenger cars & motorcycles (3.5%), watches (8.2%), handbags & wallets (3.6%), food & beverages (13.0%) and clothing & footwear (5.8%) dropped by 34.3%, 31.1%, 12.3%, 10.9%, 4.7% and 0.1% respectively.

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B. Tourism, Gaming and MICE

Owing to the continuous adjustment of the gaming and tourism sector, exports of services declined by 35.9%. Gross gaming revenue decreased with exports of gaming services tumbling by 40.5% in real terms. Visitor arrivals dropped and total spending of visitors declined by 24.7%; after adjusting for tourist price increase, exports of other tourism services decreased by 21.5% in real terms. Meanwhile, number of MICE events increased by 31.8% year-on-year, but the number of participants and attendees dropped by 21.7%.

Gaming

Gross gaming revenue amounted to MOP57.12 billion in the second quarter of 2015, down by 37.4% year-on-year. Gross revenue of game of chance, which took up 99.6% of the total, decreased by 37.4% to MOP56.87 billion. VIP Baccarat revenue tumbled by 42.2% to account for 56% of the gross revenue of game of chance. Gross revenue of pari-mutuels and lotteries dropped by 29.0% to MOP247.9 million. For the first half year of 2015, gross gaming revenue went down by 36.9% year-on-year to MOP122.15 billion.

Number of casinos remained unchanged at 35 in the second quarter, with 5,814 gaming tables, up by 1.8% year-on-year and 1.9% quarter-to-quarter; number of slot machines totalled 14,192, up by 10.1% year-on-year and 11.9% quarter-to-quarter.

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Visitor Arrivals

Visitor arrivals decreased by 3.3% to 7,344,278 in the second quarter, owing to a 5.6% drop in Mainland visitors (4,758,849). Mainland visitors travelling to Macao under the Individual Visit Scheme (IVS) held stable as the same quarter of 2014, at 2,107,801, constituting 44.3% of the total visitors from Mainland China. Meanwhile, visitors from Hong Kong, Taiwan and the Republic of Korea increased by 3.3%, 1.5% and 8.1% respectively.

Average length of stay of visitors was 1.1 days, up by 0.1 day year-on-year. Same-day visitors accounted for 53.7% of the total, down by 2.9 percentage points quarter-to-quarter.

Package tour visitors decreased by 7.8% to 2,363,563.

For the first half year or 2015, visitor arrivals decreased by 3.5% year-on-year to 14,756,499; package tour visitors rose by 1.3% to 4,942,288.

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Hotels

Hotels and guesthouses had 29,910 available guest rooms in the second quarter, an increase of 7.2%; five-star hotels accounted for 66.6% of the total supply. Number of guests checking into hotels and guesthouses dropped by 4.4% to 2,536,006, constituting 70.2% of the total overnight visitors. The average occupancy rate of hotels and guesthouses decreased by 7.8 percentage points year-on-year to 77.3%. The average length of stay of guests held stable at 1.4 nights, with five-star hotel guests staying the longest at 1.6 nights.

For the first half year of 2015, guests of hotels and guesthouses decreased by 8.1%

year-on-year to 4,881,407, accounting for 69.1% of the total overnight visitors. The average occupancy rate decreased by 7.8 percentage points to 78.1%. The average length of stay of guests stayed at 1.5 nights.

Visitor Spending

Total spending of visitors amounted to MOP12.25 billion in the second quarter, down by 24.7% from MOP16.26 billion in the same quarter of 2014. Per-capita spending of overnight visitors decreased by 28.0% to MOP2,820, while that of same-day visitors increased by 10.8% to MOP676.

Per-capita spending of visitors dropped by 22.1% to MOP1,668, a larger decrease compared with the previous quarter. Mainland visitors spent an average of MOP2,012, down by 24.3%, with IVS visitors spending MOP2,530. Per-capita spending of visitors from

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Japan (MOP1,543), Thailand (MOP1,220), Taiwan (MOP1,374), Singapore (MOP1,741) and Hong Kong (MOP870) decreased by 23.9%, 15.9%, 14.5%, 6.7% and 1.3%

respectively. Visitors from Australia had relatively high per-capita spending among the long-haul visitors, at MOP1,523.

Analysed by expenditure structure, visitors spent mainly on Shopping (45%), Accommodation (25%) and Food & Beverage (22%). Structure of shopping spending showed significant changes since the beginning of this year, in which the share of luxury consumption such as Jewellery & Watches has been significantly reduced and replaced by Local Food Products, Clothing, Cosmetics and Perfume. Compared with the first quarter, the share of Cosmetics and Perfume rose to 22% while that of Clothing dropped to 14%.

MICE (Meetings, Incentives, Conventions and Exhibitions)

A total of 224 MICE events were held in the second quarter, up by 54 year-on-year;

number of participants and attendees decreased by 21.7% to 404,982 on account of a 23.3% decline in exhibition attendees (383,767). Meanwhile, 208 meetings and conferences were held, drawing 21,215 participants.

For the first half year, a total of 424 MICE events were held, up by 45 year-on-year;

total number of participants and attendees decreased by 19.6% to 654,162.

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C. Consumption and Prices

Private Consumption

Private consumption expenditure expanded by 2.0% in real terms in the second quarter of 2015, lower than the 6.7% rise in the previous quarter. Household final consumption expenditure in the domestic market increased by 1.3% and that abroad went up by 7.2%. Private consumption expenditure for the first half year of 2015 registered an increase of 4.3%.

Retail Sales

Value of retail sales amounted to MOP14.26 billion in the second quarter, down by 12.9% year-on-year and 12.5% quarter-to-quarter. Value of retail sales of Watches, clocks

& jewellery (20.9% of total), Goods in department stores (14.5%), Adults’ clothing (10.0%), Leather goods (10.0%) and Motor vehicles (5.7%) decreased by 29.2%, 15.4%, 16.1%, 22.0% and 28.7% respectively year-on-year. Value of retail sales of Cosmetics & sanitary articles increased by 20.2% year-on-year and 6.2% quarter-to-quarter, while that of Communication equipment rose by 37.5% year-on-year but dropped slightly quarter-to-quarter. Total value of retail sales for the first half year of 2015 decreased by 12.1% year-on-year to MOP30.54 billion, of which sales of Watches, clocks & jewellery topped at MOP6.71 billion.

After removing the effect of prices, volume of retail sales decreased by 10.1%

year-on-year, with marked decrease being observed in the sales volume of Motor vehicles (-28.1%), Watches, clocks & jewellery (-24.6%), Leather goods (-19.1%) and Goods in department stores (-16.6%). Volume of retail sales decreased by 12.6% quarter-to-quarter, of which sales volume of Adults’ clothing (-25.1%), and Watches, clocks & jewellery (-20.3%) dropped notably, but that of Cosmetics & sanitary articles went up by 6.1%. For the first half year, volume of retail sales decreased by 9.5% year-on-year, with that of Watches, clocks & jewellery declining the most by 26.7%.

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Prices

The average Composite CPI rose by 4.8% year-on-year in the second quarter. The CPI growth has been moving down, but of little help in reducing inflationary pressures.

Notable increase was observed in the price indices of Housing & fuels (+9.6%), Health (+5.8%) and Food & non-alcoholic beverages (+5.0%). In addition, implicit deflator of GDP that measures changes in overall prices rose by 5.0% year-on-year.

For the first half year of 2015, the average Composite CPI increased by 4.9%

year-on-year, with notable increase being observed in the price indices of Housing & fuels (+10.3%) and Health (+5.7%); however, price index of Alcoholic beverages and tobacco decreased by 1.1%. Implicit deflator of GDP rose by 5.3% in the first half year.

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D. Employment

Demand for labour remained buoyant, leading to an increase in employment, non-resident workers and employment earnings. Economically active population (labour force) totalled 405,000 in the second quarter, with an employed population of 398,000, up by 3.9% and 3.8% respectively year-on-year. Employment in Recreational, Cultural, Gaming & Other Services reached 94,000, of which 84,000 were working in Gaming &

junket activities, accounting for 21.0% of the total; employment in Construction and Public Administration & Social Security saw notable growth, at 12.9% and 18.7% respectively.

Non-resident workers rose by 16.2% year-on-year to 180,523 at the end of the second quarter, with 27.0% working in Construction and 25.3% in Hotels & Restaurants.

Job market remained stable. The unemployment rate was 1.8%, up by 0.1%

year-on-year and quarter-to-quarter; the underemployment rate was 0.4%. Total number of unemployed was about 7,200, with 9.5% being fresh labour force entrants searching for their first job. Analysed by the previous industry engaged of the unemployed, 39.4% had worked in Recreational, Cultural, Gaming & Other Services and 16.7% in Wholesale and Retail Trade. In terms of educational attainment, 29.8% had senior secondary education;

26.1% had tertiary education and 25.4% had junior secondary education.

Median monthly employment earnings of the employed held stable as the previous quarter at MOP15,000 in the second quarter, up by 15.4% year-on-year. Median earnings of the employed residents decreased by 2.8% quarter-to-quarter, at MOP17,500. Analysed by industry, median employment earnings in Wholesale and Retail Trade logged the highest year-on-year increase of 20.0%. For Gaming & junket activities that accounted for

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the largest share of total employment, median employment earnings increased by 12.5%

year-on-year.

E. Investment

Investment in Construction and Equipment

In the second quarter of 2015, construction investment increased by 5.0% but equipment investment decreased by 8.9% year-on-year in real terms, causing overall investment to expand by 3.2%. Investment by the private sector and the public sector grew by 1.6% and 36.0% respectively. For the first half year, overall investment increased by 15.8%, with construction and equipment investment rising by 18.1% and 0.8% respectively;

investment by the private sector and the public sector increased by 13.2% and 82.7%

respectively.

For the investment by the private sector, number of construction of new buildings, units and gross floor area surged by 177.8%, 1,634.0% and 667.2% respectively in the second quarter; meanwhile, number of building completions and area increased by 35.3%

and 335.1% respectively. Despite the construction of large-scale tourism and entertainment facilities underway, construction investment by the private sector expanded by just 3.1% in real terms in the second quarter, due to the relatively large base of comparison in the same quarter of 2014 and a decrease in real estate developers’ margin;

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381.8% respectively. Construction and equipment investment by the private sector increased by 15.1% and 1.4% respectively.

As regards investment by the public sector, construction investment increased by 45.2% but equipment investment decreased by 19.4% in the second quarter.

Transactions on Real Estate

Real estate transactions slightly improved in the second quarter, with 3,083 building units and parking spaces being purchased and sold at MOP18.03 billion, up by 63.7% and 78.5% respectively quarter-to-quarter. For the first half year of 2015, a total of 4,966 building units were purchased and sold at MOP28.13 billion.

A total of 1,864 residential units (comprising 456 pre-sale units and 1,408 existing units) were purchased and sold at MOP11.74 billion in the second quarter, accounting for 60.5% and 65.1% of the respective total.

As regards status of the buyers, 2,963 units (96.1% of total) were purchased by Macao residents; value of transaction amounted to MOP17.35 billion, with its share in total value going up from 96.1% in the previous quarter to 96.2%. Meanwhile, 97 units were purchased by non-residents, and the value amounted to MOP542.6 million. For the first half year, a total of 4,779 units were purchased by Macao residents and the value of transaction amounted to MOP27.05 billion, both accounting for 96.2% of the respective total; moreover, 148 units were purchased by non-residents at MOP844.6 million.

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The average transaction price of residential units increased by 6.5%

quarter-to-quarter to MOP95,345 per square metre of usable area in the second quarter.

The average price of those in the Macao Peninsula decreased by 1.2% quarter-to-quarter to MOP84,832 per square metre, while the average price of those in Taipa increased by 23.7% to MOP116,642 per square metre. The average price of office units rose by 1.9%

quarter-to-quarter to MOP118,346 per square metre. The average price of industrial units declined by 2.0% quarter-to-quarter to MOP55,256 per square metre.

Business Investment

Number of new incorporations decreased by 11.0% to 1,294 in the second quarter of 2015; total value of registered capital declined by 67.7% to MOP367.7 million. Among the new incorporations, 35.5% were operating in Wholesale & Retail Trade, 25.3% in Business Services and 16.2% in Construction. In terms of registered capital, Real Estate predominated with 22.1% of the total, while Wholesale & Retail Trade and Business Services accounted for 21.2% and 10.5% respectively. As regards origin of capital, capital from Mainland China shared 63.7% of the total at MOP234.2 million, and that from Macao and Hong Kong took up 24.3% and 5.1% respectively. For the first half year, total number of new incorporations increased by 6.6% to 2,749 and the registered capital decreased by 60.6% to MOP524.4 million.

Number of companies in dissolution totalled 116 in the second quarter, down by

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year-on-year to 274.

F. Public Accounts

In the second quarter of 2015, total government revenue decreased by 35.2% to MOP26.76 billion owing to a decrease in direct taxes, of which tax revenue from gaming dropped by 38.2% to MOP23.11 billion.

Meanwhile, total government expenditure rose by 13.7% to MOP18.13 billion, on account of a 15.8% increase in current transfer. Fiscal surplus stood at MOP8.63 billion in the second quarter, lower than the MOP25.36 billion surplus in the same quarter of 2014.

For the first half year of 2015, total government revenue amounted to MOP55.33 billion, down by 33.7% year-on-year, with gaming tax revenue dropping by 35.6% to MOP48.49 billion; total government expenditure increased by 30.0% to MOP29.91 billion;

fiscal surplus amounted to MOP25.42 billion.

G. Money and Finance

At the end of June 2015, narrow money supply M1 went up by 12.0% year-on-year, of which currency in circulation and demand deposits increased by 17.4% and 11.0%

respectively. Meanwhile, broad money supply M2 (including M1 and quasi-monetary liabilities) swelled by 1.1%. In terms of currency structure, the share of the Macao pataca (MOP) in M1 increased by 1.7 percentage points to 47.9%, and its share in M2 rose by 3.2 percentage points to 27.2%. The share of the Hong Kong dollar was 50.1% in M1 and 50.0% in M2.

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Resident deposits rose by 0.7% year-on-year to MOP477.36 billion, of which deposits in the MOP and the Hong Kong dollar grew by 14.2% and 2.4% respectively to MOP121.56 billion and MOP244.30 billion; other foreign currencies decreased by 13.4% to MOP111.50 billion. Meanwhile, public sector deposits with the banking sector increased by 38.2% to MOP121.69 billion.

Domestic loans extended to the private sector rose by 21.9% year-on-year to MOP376.01 billion, of which outstanding value of mortgage loans extended to residents went up by 24.4% year-on-year to MOP281.36 billion. Within domestic loans to the private sector, the MOP accounted for 26.8%, valued at MOP100.74 billion, and the Hong Kong dollar took up 65.7%, valued at MOP246.95 billion.

The loan-to-deposit ratio for the resident sector was 62.8%, up by 7.9 percentage points from a year earlier, while that for both the resident and non-resident sectors increased by 6.1 percentage points to 88.1%.

As the MOP is indirectly pegged to the US dollar, interest rates in Macao are normally adjusted to be in line with those in the US. In the second quarter, the US Federal Reserve maintained the range for the Fed funds rate at 0% to 0.25%. Meanwhile, Macao’s savings deposit rate was held stable at 0.01%.

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and 15.9%, whereas the respective rate against the Chinese renminbi decreased by 0.4%.

The effective exchange rate index for the MOP, a gauge of exchange rates of the MOP against currencies of Macao’s major trading partners, rose by 6.93 points year-on-year to 104.20.

H. Other Economic Indicators

Transport and Communications

In the second quarter of 2015, gross weight of seaborne containerized cargo (69,932 tonnes) and air cargo (7,469 tonnes) increased by 6.2% and 10.0% respectively, while gross weight of containerized cargo by land (5,891 tonnes) decreased by 17.0%. For the first half year, gross weight of seaborne containerized cargo (133,077 tonnes) and air cargo (13,960 tonnes) increased by 8.3% and 7.7% respectively, but that of containerized cargo by land (10,148 tonnes) decreased by 15.7%.

As regards local transport, new registration of motor vehicles decreased by 6.9% in the second quarter; new registration of motorcycles and cars decreased by 1.9% and 11.2% respectively. For the first half year of 2015, new registration of motor vehicles increased by 2.3%, with that of motorcycles rising by 10.1% but that of cars falling by 4.8%.

At the end of June 2015, number of licensed motor vehicles increased by 4.9% to 243,966, comprising 117,464 cars and 126,502 motorcycles.

At the end of June 2015, number of Internet subscribers went up by 11.2% to 316,593;

mobile phone subscribers increased by 10.5% to 1,864,955; meanwhile, number of fixed telephone lines dropped by 3.5% to 150,640.

Water and Energy Consumption

Consumption of electricity increased by 7.4% to 1.35 billion kWh in the second quarter of 2015, and that of water rose by 3.1% to 20.5 million cubic meters. Consumption of liquid fuel (gasoline, kerosene, gas oil & diesel, and fuel oil) totalled 110.0 million litres, up notably by 60.8%; consumption of liquefied petroleum gas (LPG) dropped by 1.9% to 10,452 tonnes; consumption of natural gas totalled 294 thousand cubic meters. For the first half year, consumption of electricity increased by 6.3% to 2.30 billion kWh, and that of water rose by 3.1% to 40.4 million cubic meters; consumption of liquid fuel was 202.8 million litres, up significantly by 59.6%; consumption of LPG dropped by 1.9% to 23,282 tonnes and that of natural gas totalled 620 thousand cubic meters.

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III. Concluding Remarks

In the second quarter of 2015, the economy of Macao contracted by 26.4%

year-on-year in real terms, down further from the 24.5% drop in the first quarter, on account of a decline in exports of services. In spite of the continuous adjustment of the economy, expenditure and investment maintained growth, the employment situation was still favourable and the public accounts remained in surplus. At the same time, economic adjustment weighed on salaries, prices and rents, which is helpful in promoting appropriate economic diversification.

Looking ahead to the third quarter of 2015, domestic demand is expected to remain stable; private consumption and private investment are likely to maintain growth, albeit at a slower pace; public investment is expected to stay steady. As regards external demand, despite an increase in merchandise exports in July and August, visitor arrivals decreased and gross gaming revenue tumbled by 35.0% year-on-year; thus, exports of services is likely to drop further in the third quarter. Taking into consideration these factors, the tourism and gaming industries will continue to undergo adjustment; meanwhile, limited growth in domestic demand may only slightly reduce the impact of economic contraction.

As the economic adjustment has started since the third quarter of 2014, the economy of Macao is likely to go further down in the third quarter of 2015, but the rate of contraction will slightly slow down.

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SYMBOLS AND ABBREVIATIONS

.. Not applicable r Revised figures

- Absolute value equals zero

# Confidential data

~ No figure provided

0^# Magnitude less than half of the unit employed p Provisional figures

@ Figures are subject to revision later on

TEU Twenty-foot Equivalent Unit (20 feet × 8 feet × 8 feet)

Note: Due to rounding, total may not correspond to the sum of the partial figures.

Figures are subject to regular revisions when required.

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I. PRINCIPAL ECONOMIC INDICATORS OF THE WORLD AND MACAO

1. PRINCIPAL ECONOMIC INDICATORS OF THE WORLD (YEAR-ON-YEAR COMPARISON)

%

2014 2014 2014 2015 2015

Q2 Q3 Q4 Q1 Q2

USA

　Gross Domestic Product 2.2^r 1.5^r 2.4 2.6 2.9^r 2.5^r 2.9^r 2.7

　Exports of goods 4.4 2.1^r 2.7^r 3.4^r 4.1^r 0.9^r -4.8^r -5.5

　Imports of goods 3.1 -0.3^r 3.5^r 4.6^r 3.7^r 3.3 -1.9^r -4.7

　Consumer Price Index 2.1 1.5 1.6 2.1 1.8 1.2 -0.1 -

　Unemployment rate 8.1 7.4 6.2 6.1 6.2 5.5 5.8 5.3

Euro area ^a

　Gross Domestic Product -0.8 -0.3^r 0.9 0.7^r 0.8 0.9 1.2^r 1.5

　Exports of goods 7.7 1.1 2.3 0.6 2.9 4.5^r 5.1 7.8

　Imports of goods 1.8 -2.9 0.2^r 0.2 0.4 -^r 1.5^r 3.8

　Consumer Price Index 2.5 1.3 0.4 0.6 0.4 0.2 -0.3 0.2

　Unemployment rate 11.4 12.0 11.6 11.5 11.1 11.6^r 11.6^r 10.9

Germany

　Gross Domestic Product 0.4 0.3^r 1.6 1.0 1.2 1.6 1.2^r 1.6

　Exports of goods 3.3 -0.2 3.7 1.5 5.4 5.3 5.3^r 8.5

　Imports of goods 0.4 -0.9 2.1 0.5 2.1 2.2 1.8 4.1

　Consumer Price Index 2.0 1.5 0.9 1.1 0.8 0.5 - 0.5

French

　Gross Domestic Product 0.2 0.7 0.2 -0.2 0.2 0.1^r 0.9^r 1.0

　Exports of goods 4.0^r -1.6^r 0.2^r -1.6 -0.9 2.8^r 2.5 6.9

　Imports of goods 1.9 -2.4 -0.8^r -1.0^r -0.7^r -1.1^r -0.4^r 1.9

　Consumer Price Index 2.0 0.9 0.5 0.6 0.4 0.3 -0.2 0.2

　Unemployment rate 9.8 10.3 10.3 9.9^r 9.9^r 10.8 10.8 10.0

United Kingdom

　Gross Domestic Product 0.7 1.7 3.0^r 3.0^r 3.0^r 3.4^r 2.9^r 2.6

　Exports of goods -1.3 0.5 -4.7^r -8.0^r -6.9^r -1.4^r -3.4^r 1.9

　Imports of goods 2.1 1.3 -1.4^r -2.2^r -3.3^r 0.2^r -0.7^r -1.3

　Consumer Price Index 2.8 2.5 1.5 1.7 1.4 0.9 0.2 -

a Consists 19 member states since 2015.

Source : U.S. Bureau of Economic Analysis, U.S. Census Bureau, U.S. Bureau of Labor Statistics Eurostat

2012 2013 2014

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1. PRINCIPAL ECONOMIC INDICATORS OF THE WORLD (YEAR-ON-YEAR COMPARISON) (Cont'd)

%

2014 2014 2014 2015 2015

Q2 Q3 Q4 Q1 Q2

Mainland China

　Gross Domestic Product 7.8 7.7 7.4 7.5 7.3 7.3 7.0 7.0

　Exports of goods 7.9 7.8 6.0 5.0 13.0 8.6 4.6 -2.2

　Imports of goods 4.3 7.3 0.5 1.3^r 1.0 -1.9^r -17.7^r -13.5

　Consumer Price Index ^a 2.6 2.6 2.0 2.3 2.1 2.0 1.2 1.3

Hong Kong

　Gross Domestic Product 1.5 3.1 2.5 2.0 2.9 2.4 2.4^r 2.8

　Exports of goods 2.9 3.6 3.2 4.8 5.8 1.2 2.3 -1.9

　Imports of goods 3.9 3.8 3.9 4.5 5.7 3.2 1.4 -3.2

　Consumer Price Index 4.1 4.3 4.4 3.6 4.8 5.1 4.4 3.0

　Unemployment rate 3.3 3.4 3.3 3.3 3.5^r 3.1 3.2 3.3

Taiwan

　Exports of goods -2.3 1.4 2.7 2.9 6.6 0.4 -4.2 -9.8

　Imports of goods -3.9 -0.2 1.5 3.7 7.5 -3.3 -15.0 -14.9

　Consumer Price Index 1.9 0.8 1.2 1.6 1.5 0.8 -0.6 -0.7

Japan

　Gross Domestic Product 1.7 1.6 -0.1 -0.4 -1.4 -1.0^r -0.8^r 0.7

　Exports of goods -2.7 9.5 4.8 0.1 3.2 9.1 9.0 6.7

　Imports of goods 3.8 14.9 5.7 2.8 2.4 1.2 -9.3 -5.1

　Consumer Price Index - 0.3 2.8 3.6 3.4^r 2.5 2.3 0.5

Republic of Korea

　Gross Domestic Product 2.3 2.9 3.3 3.4 3.3 2.7 2.5 2.2

　Exports of goods -1.3 2.1 2.3 3.2 3.6^r 0.9 -3.0^r -6.9

　Imports of goods -0.9 -0.8 1.9 3.3 5.4 -2.8 -15.5^r -15.6

　Consumer Price Index 2.2 1.3 1.3 1.6 1.4 1.0 0.6 0.5

Singapore

　Exports of goods -0.9 0.6 1.1 2.7 -1.4 -3.8 -5.4 -8.5

　Imports of goods 3.2 -1.6 -0.6 3.0 -5.7 -6.0 -16.1 -12.9

　Consumer Price Index 4.6 2.4 1.0 2.2 1.0 - -0.3 -0.4

　Unemployment rate 2.0 1.9 2.0 2.6 1.7 1.6 1.7^r 2.6

a Accumulated year-on-year comparison.

Source : China National Bureau of Statistics

Hong Kong SAR Census and Statistics Department

Directorate-General of Budget, Accounting and Statistics, Executive Yuan, Taiwan; Ministry of Economic Affairs, Taiwan Economic and Social Research Institute of Japan; Ministry of Finance of Japan; Statistics Bureau of Japan

National Statistics Office of Republic of Korea; Bank of Korea

2012 2013 2014

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2. PRINCIPAL ECONOMIC INDICATORS OF THE WORLD (QUARTER-TO-QUARTER COMPARISON)

%

2014 2014 2014 2015 2015

Q2 Q3 Q4 Q1 Q2

USA

　Gross Domestic Product 2.2^r 1.5^r 2.4 4.6 4.3^r 2.1^r 0.6^r 3.7

　Exports of goods 4.4 2.1^r 2.7^r 1.9^r 1.2^r -0.9^r -6.5^r 0.5

　Imports of goods 3.1 -0.3^r 3.5^r 2.1^r -0.2^r -0.1 -3.8^r -0.5

　Consumer Price Index 2.1 1.5 1.6 0.6 0.3 -0.2 -0.8 0.7

　Unemployment rate^a 8.1 7.4 6.2 6.2 6.1 5.7 5.6 5.4

Japan

　Gross Domestic Product 1.7 1.6 -0.1 -1.9^r -0.3^r 0.3 1.1^r -0.4

　Exports of goods -2.9^r 9.6 4.6 -0.1^r 3.8^r 5.8^r -^r -2.7

　Imports of goods 3.3 15.2 5.6^r -8.1^r 3.4^r 1.4^r -5.7^r -3.7

　Consumer Price Index - 0.3 2.8 2.2 0.3 -0.2 -0.1 0.4

Hong Kong

　Gross Domestic Product 1.5 3.1 2.5 - 1.4 0.2 0.7^r 0.4

　Exports of goods 2.9 3.6 3.2 3.8 2.0 -3.2 -0.6 -1.3

　Imports of goods 3.9 3.8 3.9 2.4 1.8 -0.4 -2.0 -2.5

　Consumer Price Index 4.1 4.3 4.4 0.7 0.5 2.9 0.3 -0.6

a After seasonal adjustment.

Source : U.S. Bureau of Economic Analysis, U.S. Census Bureau, U.S. Bureau of Labor Statistics

Economic and Social Research Institute of Japan; Ministry of Finance of Japan; Statistics Bureau of Japan Hong Kong SAR Census and Statistics Department

3. GROSS DOMESTIC PRODUCT OF MACAO

2014 2014 2014 2015 2015

Q2 Q3 Q4 Q1 Q2^@

At current prices:

GDP (Million MOP) 343 499 409 959 443 298 114 115 108 682 105 116 91 901 88 233

GDP per capita ('000 MOP) 603.6 691.6 713.5 .. .. .. .. ..

Chain volume measures in chained (2013) dollars:

GDP (Million MOP) 370 476 409 959 408 509 105 233 99 022 94 528 82 797 77 485

Year-on-Year change in real terms (%)

GDP 9.2 10.7 -0.4 8.0 -2.3 -17.2 -24.5 -26.4

Private consumption expenditure 8.7 6.6 5.9 6.5 7.7 4.6 6.7 2.0

In the domestic market 8.1 7.2 6.0 7.1 7.3 4.3 4.7 1.3

Abroad 11.6 3.5 6.0 4.1 11.9 6.6 10.6 7.2

Government final consumption expenditure 6.2 5.1 7.1 4.7 8.0 5.9 6.8 5.7

Gross fixed capital formation 19.9 8.9 35.2 49.2 37.6 27.7 32.2 3.2

Private sector 9.3 33.3 41.6 53.5 41.6 33.7 28.1 1.6

Government 51.8 -47.9 -6.0 -3.1 -2.7 7.3 208.7 36.0

2014

2012

2012 2013

2013 2014

MACAO ECONOMIC BULLETIN