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International Monetary Fund. Asia and Pacific Dept

IMF Country Report No. 22/121

International Monetary Fund. Asia and Pacific Dept

IMF Country Report No. 22/120

International Monetary Fund. Asia and Pacific Dept
Macao SAR’s recovery is expected to continue in 2022, but it will take several years before the economy returns to its pre-crisis level. Although strong fiscal support and the financial strength of Macao SAR’s casino groups cushioned employment and consumption, the sharp contraction in activity exposed Macao SAR’s vulnerability to external forces affecting the inflow of tourists. Short-term risks to the outlook include a re-intensification of the COVID-19 pandemic and an increase in Macao SAR’s financial sector stress. The heavy impact of the pandemic on Macao SAR’s growth highlights the need to diversify the economy beyond the gaming industry. The high exposure to climate-related shocks poses long-term concerns.
International Monetary Fund. Asia and Pacific Dept

1. Macao SAR has been hit hard by the COVID-19 crisis, but the strong policy response helped contain the spread of the virus and soften its economic impact.1 Strict containment and border control measures helped preserve people’s health and safety. Macao SAR has reported only 79 confirmed COVID-19 cases and no deaths as of February 15, 2022. Deploying its large fiscal reserves, the government helped stabilize employment and consumption with fiscal stimulus amounting to about 12 percent of GDP in 2020–21.

International Monetary Fund. Asia and Pacific Dept

This chapter evaluates whether Macao SAR’s current labor market meets the skills demand of the four sectors targeted by the government’s diversification strategy. Analysis based on the overall and sectoral occupational composition suggests that sectors targeted by the government’s diversification strategy demand high-skilled labor, while Macao SAR’s current labor market mainly comprises low and middle-skill-requiring occupations. This indicates a need for skill upgrading to bridge skill gaps. Further estimates show that overcoming the skills mismatch to achieve occupational labor mobility is costly and takes time. These findings underscore the need for Macao SAR to undertake labor market reform to nurture and attract talents.

International Monetary Fund. Asia and Pacific Dept

The Macao SAR government aims to develop a modern financial sector, and some progress has already been made. This chapter evaluates structural factors conducive to the development of financial hubs and studies the experience of the already established financial centers to draw lessons for Macao SAR. The analysis suggests that to further advance Macao SAR’s financial sector development, policies should focus on addressing the limited availability of skilled labor, closing the gaps in physical and ICT infrastructure, enhancing the efficiency of public institutions, and improving the business environment.

International Monetary Fund. Fiscal Affairs Dept., International Monetary Fund. Strategy, Policy, &, and Review Department
This Supplement presents an account of the extensive consultations and the results of various analyses that supported the development of “A Strategy for IMF Engagement on Social Spending.”