Stagflation a future concern: survey

Saturday, January 15, 2011
Issue 1212, Page 3
Word count: 525
Published in: Macau Daily Times

By Poyi (Natalie) Leung

Despite Macau’s reported record high gaming revenues and optimistic economic performance last year, a local scholar has warned of the emergence of stagflation in the global economy which ultimately could also impact the SAR.

According to the findings of the 4th Quarter 2010 Macau Consumer Confidence Index (CCI) announced yesterday, the overall index was 84.69 on a sale of 0 – 200, representing that local consumers felt a lack of confidence both in the reporting period and in the first quarter of 2011.

The larger the value the more confident the respondents are, with 100 being the passing mark.

Compared to the third quarter of 2010 and the same quarter of 2009, the index dropped 3.91 percent and 2.53 percent respectively, suggesting a certain level of reduction in local consumer confidence.

The Institute for Sustainable Development of the Macau University of Science and Technology (MUST) successfully interviewed 1,007 Macau residents aged 18 or above between December 14 and 18, 2010.

Among the six sub-indices used to calculate the overall CCI, “employment situation” was the only sub-index that reported an increase, by 0.93 percent or 1.01, over the previous quarter to 109.86.

Consumer confidence in the “local economy” was 109.36, down by 3.42 percent or 3.87 compared to the third quarter of 2010.

According to associate professor of the faculty of management and administration of MUST, Liu Cheng Kun, although Macau saw positive economic performance during 2010 and the gaming sector continued to boom with record high revenues, the survey showed that Macau people had less confidence in the local economy, which, might be attributed to their concerns over climbing inflation and growing living costs.

“During the recovery of the world economy, liquidity that was injected by different governments to stimulate the economy previously has gradually shown negative effects in the economic operation, stagflation could become a main concern in the future,” Liu pointed out in the press conference.

The scholar added that if governments in the world withdrew their economic stimulating measures too early when the economy was not yet fully recovered, it could lead to stagflation in which both the inflation rate and the unemployment rate are persistently high.

If the situation occurred in the US, Macau would eventually feel the impact as its economy is predominately affected by the external factors, he explained.

Meanwhile, the survey found that “price levels” dropped the most among the five sub-indices (except “employment situation”), by 11.81 percent to 51.25 in the last quarter of 2010, a result that Liu said demonstrated people’s living pressure caused by inflation.

“Living standards” also went down 4.76 percent to 92.41.

The SAR Government is going to handout cash to local residents this month, six months earlier than last year, in order to ease their living pressure.

However, Liu said based on the current situation, the “price levels” sub-index may drop further in the next survey, and called on the Government to implement more “powerful” livelihood measures in the near future.

The other sub-indices “home purchase” and “stock investment” also declined 3.64 percent to 50.88 and 4.53 percent to 94.36 respectively, showing a weaker desire to spend money on these two areas.

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