Macau Monetary Authority Statement

Author: | Published: 5 Sep 2017
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The economy of the Macao Special Administrative Region (MSAR) has revived since the third quarter of 2016 after eight consecutive quarters of contraction, mainly underpinned by improvement in service exports. Although real gross domestic product still shrank by 2.1% for 2016 as a whole, the growth pace accelerated to 10.3% year-on-year in the first quarter of 2017. Concurrently, the labour market was largely stable while the composite CPI inflation abated further to below 1% in the first five months of 2017 from 2.4% in 2016.

Supported by its favourable economic conditions, the credit ratings of MSAR continued to stay within the double-A category. In addition, the MSAR's economy was rated as "mostly free" for the ninth consecutive year according to the Index of Economic Freedom compiled by the Heritage Foundation. The MSAR ranked the eighth freest among 43 economies in the Asia-Pacific region or the 32nd among a total of 180 economies.

The financial industry remained resilient during the economic downturn, given its strict adherence to the principle of prudence and strong compliance of supervisory requirements in its operations. In 2016, the banking sector was characterised by a persistent rise in after-tax profit, high asset quality, sufficient capital adequacy and ample liquidity. At end-2016, the non-performing loan (NPL) ratio stood at a low level of 0.2%, while the capital adequacy ratio, mainly composed of tier-one capital, reached 16.1%. Meanwhile, the insurance sector featured increased total assets and premium income, improvement in the loss ratio and significant profit growth. The solvency ratio of insurance companies remained sufficient, staying well above the statutory requirement.

The MSAR Government published its first Five-Year Development Plan (2016-2020) in 2016, which has laid down a road map for achieving sustainable development through economic diversification. The financial industry has been identified as one potential segment for diversifying the economy of the MSAR, with a focus on developing the leasing business, wealth management and the renminbi (RMB) clearing platform between the Chinese mainland and Portuguese-speaking countries. The RMB real time gross settlement system which has been in place since March 2016 also facilitates such development. While continuously striving to safeguard financial security and stability, the Monetary Authority of Macao has endeavoured to improve the business environment for financial enterprises and facilitate their operations to go beyond the local boundary. In the first half of 2017, three banks in the MSAR have succeeded in establishing operations in the mainland.

Looking forward to 2017, the MSAR's developments will move further alongside the construction of the 'One Centre, One Platform', namely, a World Centre of Tourism and Leisure, and a Commercial and Trade Cooperation Service Platform between China and Portuguese-speaking Countries. With the full support from Central Government, through appropriate diversification policies of the MSAR Government and active participation in the 'Belt and Road' initiative and 'Guangdong-Hong Kong-Macao Greater Bay Area', the MSAR economy is expected to attain steady growth. In particular, the continuous pursuit by the MSAR Government of economic diversification and regional cooperation will provide a wider range of business opportunities for the local financial industry.




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