Macau economy to expand 20.6 % this year and 10.1 % in 2011

The document, to which Macauhub had access, also expects investment to fall 6.4 % this year, which is still a lower drop than the 35.6 % fall posted in 2009, but expects gross fixed capital formation to rise 8.5 % in 2011. The rate of inflation, which this year is expected to total 2.7 %, will increase marginally to 2.8 % in 2011, according to the document, after totalling 1.1 % in 2009.

The territory’s balance of trade will continue to see increasing deficits, as manufacturing capacity continues to be transferred to mainland China in search of lower costs, but the territory will continue to post large current account surpluses due to its huge surplus on the services account.

The report also said that Macau’s fiscal position remains very strong, with the government continue to post large surpluses, although it warns against increasing dependence of the territory’s tax revenues on the gaming sector, which in the first five months of the year accounted for 89.1 % of the total.

The EIU report also questions the building of the Zhuhai-Macau-Hong Kong bridge basing its argument on recently published documents that question the project's economic feasibility, namely the fact that the Hong Kong government plans to drastically limit the number of left-hand drive vehicles that can enter its territory. Macau will be responsible for 14.7 % of the finance to build the bridge, or around us$ 290 million.

It also mentions that the planned three-lane road model is economically wasteful, as recent report showed that it would require a pay-back period of 48.6 years as compared to just 17.4 years for railway-only bridge and 19.1 years for a dual-lane road and railway bridge.

The report on Macau by the Economist Intelligence Unit also warns of regional competition in the gaming sector forecasting that casinos in other countries in the region, such as Singapore, Cambodia and one planned for Ho Chi Minh City, Vietnam, to be opened in 2013, will seek to attract high rollers that currently gamble in Macau.