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.