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In real terms, Macau people should have more money in their pockets this year as the rate of inflation, which reached 8.8 percent in first eleven months of 2008, will decrease substantially in line with a strengthening pataca.
With the slowing down of the yuan, goods imported to the territory will be cheaper and, taking the cuts in the banking rates in euros, people putting money aside for their return to Europe, may see their little nest egg grow.
The analysts’ forecast for 2009 is complete, and during the second half of the year the economy will recuperate.
The reduction in the cost of fuel and drop in the real estate prices are already signs of a decrease in the Consumer Price Index (CPI).
Pay less
“According to our data, inflation will decrease and residents will pay less,’’ says economist Albano Martins who is waiting to see how wage levels will follow.
A study by consultancy firm HR Business Solutions suggests that base salaries in Macau should register an average increase of 3.1 percent. These numbers don’t convince Albano Martins.
“I strongly doubt it. Most of the local companies adjust wages according to the inflation rate registered the previous year, which, in 2008, was 8.8 percent,’’ says Martins.
During the first few months of last year there was an increase of 8.4 percent in the CPI (the main gauge of the inflation rate) when compared to the same period in 2007. There are three motives that have led the economist to believe that the residents will be able to keep more money in their pockets.
Co-ordinator of the Economy and Finances degrees at the University of Macau, Henry Lei says: “First of all, we’re witnessing, on a global level, an adjustment in the price of raw materials, such as crude oil. And, in Macau, the drop in the number of tourists due to a restrictive policy by the central government, may help stop the rise in prices. With the suspension of work [at the Venetian] on the Cotai Strip, many workers have returned home.’’
Triple trio
These three factors are already producing practical results, translating into the prices of housing and food. According to the latest data from the Statistic and Census Bureau, the CPI decreased 0.5 percent in November 2008 when compared to October the previous year.
The most significant drops occurred in the transport sector, 2.59 percent, housing and fuels, 1.03 percent and food 0.63 percent.
The reductions are linked to a decrease in the price of petrol and liquified petrolium gas (LPG), as well as in the prices of fresh fish and farm produce. Most of the basic goods arriving in Macau are imported from the mainland – and the expected stagnation of the yuan should also help alleviate end of the month expenses.
Source: Macau Business posted on 3/31/2009 |
