CODE 18-77
$
M 256/1
Reference.
NOTE FOR THE FILE
MACAO: PROJECTS AND PROSPECTS
I joined a party of Trade Commissioners based in Hong Kong for an organised visit to Macao on 14 May. We were received by the Governor (who has since resigned) and were then treated to several talks on various aspects of the economy.
In 1985 the principle components of GDP were:
Exports Tourism
Services
Construction
35.1%
22.8%
17.3%
8.1%
Increases in 1986
+13%
+1.1%
+3.3%
-1.9%
1985 was a year of recession for everything except construction.
Inflation
in 1985 was 2.1%, in 1986 1.9% due mainly to lower oil prices and the devaluation of the yuan. Both exports and imports are growing with exports keeping ahead. Between 1981-86 GDP increased by 7.2%.
The main trade partners are:
1981
1985
USA
EEC
21.8%
33.7%
40.8%
31.3%
of which
West Germany
-1%
France
-1%
UK Italy
7.2%
6%
The EEC is losing ground to the USA. Trade with PRC is small.
Macao's exports are dominated by textiles although the proportion is falling:
1981
1986
Textiles Electronics
80.1%
69.7%
2%
2.8%
Toys, porcelain,
etc.
balance
balance
The authorities are anxious to see diversification of both products and markets. In recent years the many new garment factories have caused problems because they are labour-intensive. Macao is short of labour unless it is brought in from China.
For 1987 a 6.7% growth in exports to OECD countries is looked for with pressure on factories to produce higher value added products. Construction investment is expected to do well. Real incomes are increasing (about 7% in 1986) and interest rates remain low. Retained capital goods imports in 1986 were up 62%. The cloud on the horizon, as for Hong Kong, is US protectionism and how it might translate itself into further restrictions on low cost producers.
/Banking