Interview by Yuki Lei
The Macau Monetary Authority (AMCM) has released its “Monetary and Financial Statistics” for September, which shows that local residents’ deposits rose by 0.7 percent month-on-month to 755.6 billion patacas from August’s 747.7 billion patacas, with an economist pointing out that based on this indicator alone, it “may not be a very desirable state of affairs” in terms of Macau’s economy.
Speaking to the Post in an exclusive interview at the City University of Macau (CityU) in Taipa last week, Lou Shiyan, associate professor of the private university’s Faculty of Finance, said that Macau’s relatively low tax rate coupled with locals’ relatively high income performance indicated that the Macau government is promoting the concept of “keeping wealth with the people”, which, she added, was actually a good phenomenon.
However, on the other hand, Lou pointed out that the rise in locals’ deposits proved that after the three-year-long COVID-19 pandemic, the investment climate in the market, generally speaking, was unfavourable and, at the same time, residents are reluctant to buy properties and have become more cautious in using their deposits for investment and consumption.
Deposits in Macau can be divided into local residents’ deposits and non-local residents’ deposits. Citing the official statistic on local residents’ deposits, Lou pointed out that, overall, residents’ deposits reached a peak of 680.400 billion patacas in January 2020, and that during the pandemic, residents’ deposits declined – but not that much, to 653.147 patacas in April 2022, a drop of 27.253 billion patacas. Since then, she added, local residents’ deposits basically have shown an upward trend, reaching a record high of 755.637 billion patacas in September this year, an increase of 102.491 billion patacas compared to April 2022.
In terms of deposit structure, according to Lou, residents’ deposits are generally categorised into demand, savings and time deposits: “The rise in deposits during this period was mainly attributable to the significant increase in time deposits which increased by 132.445 billion patacas from 37.058 billion patacas to 503.027 billion patacas over the same period”. She underlined that “savings deposits and demand deposits, on the contrary, have declined, indicating that residents have become more conscious of their financial management”.
Since January 2020, Macau’s total loans first rose and then fell, reaching a peak of 1.350 trillion patacas in June 2021, and then showed a downward trend, dropping to 1.046 trillion patacas in September this year, of which the loans to local residents and non-local residents dropped by 34.943 billion patacas and 268.969 billion patacas respectively, while the latest AMCM figures pointed out that the loan-to-deposit ratio for local residents fell to 54.3 percent from 55.3 percent at the end of August.
Lou said she believed that the simultaneous rise and fall of Macau residents’ deposits and loans could not be separated from the impact of the US Federal Reserve’s interest rate policy, pointing out that the pataca is indirectly pegged to the US dollar through the Hong Kong dollar, and that with the Fed’s interest rate hiking cycle starting from March 2022, the base rate was raised successfully from 0.25 percent in January 2022 to 5.5 percent in July 2023, which had continued until September 18 this year before it was lowered. She added that the base rate in Macau is subject to changes in the US Fed’s interest rates, increasing from the previous 0.5 percent to 0.75 percent in March 2022, and thereafter increasing all the way to 5.75 percent and remaining there until this September.
Lou went on to say that although the local economy has been recovering, in terms of chain volume, it has yet to return to the pre-pandemic level, quoting the Statistics and Census Bureau (DSEC) according to which in 2019, Macau’s gross domestic product (GDP) and per capita GDP amounted to 445.018 billion patacas and 660,800 patacas respectively, but then in 2023, both fell to 356.219 billion patacas and 525,200 patacas respectively, 20 percent lower than in 2019 respectively, showing that the profitability of surviving enterprises has not yet recovered from the closure of some enterprises during the pandemic, and residents do not yet have sufficient confidence in setting up new enterprises or expanding their business scale.
Concerning low consumer sentiment, Lou said: “Perhaps the government needs to change people’s expectations to ensure that the economy will grow steadily, that residents will expect their incomes to grow in the future and that businesses will expect to make money again in the future, then individuals will consume more, and then businesses will invest more”.
Local economist Samuel Tong Kai Chung, when asked recently by public broadcaster TDM, suggested that the government should extend its existing measures to help small- and medium-sized enterprises (SMEs) and give them more time to recover. When asked by the Post about her fellow economist’s remarks, Lou said that economically speaking, “if a company can survive in the face of competition, it means that the company has its own vitality” and, therefore, it was necessary to provide them with some supportive measures at the initial stage to help them tide over the difficulties.
Lou also said she hoped the government could simplify the application procedures for SMEs wishing to develop in the Guangdong-Macau In-Depth Cooperation Zone in Hengqin.
Lou Shiyan, associate professor of the Faculty of Finance at the City University of Macau (CityU) poses after last week’s Post on-campus interview. – Photo: Yuki Lei
