Information from the Statistics and Census Service (DSEC) indicated that the economy of Macao contracted by 13.3% year-on-year in real terms in the first quarter of 2016, mainly due to the continuous decline in exports of services and decrease in investment. External demand showed no sign of improvement, exports of goods and services fell by 24.6% and 13.7% respectively, of which exports of gaming services dropped by 17.1%. Domestic demand slackened, private consumption expenditure declined by 2.3%; investment and imports of goods shrank by 31.4% and 19.9% respectively whereas government final consumption expenditure rose by 1.5%. Meanwhile, the implicit deflator of GDP that measures changes in prices rose by 1.9% year-on-year. Private consumption expenditure receded. Despite the prevailing favourable employment conditions, pay growth remained subdued, dragging down private consumption expenditure by 2.3% year-on-year, with a notable decline in expenditure on durable goods. Household final consumption expenditure in the domestic market fell by 2.3% while that abroad rose by 3.9%. Government final consumption expenditure, the only expenditure component that registered growth, expanded by 1.5% year-on-year. Compensation of employees rose by 3.1% while net purchases of goods and services dropped by 1.0%. Investment declined apparently. Gross fixed capital formation, the gauge of investment, contracted by 31.9% year-on-year, owing to the substantial decline in private investment. Private investment in construction and equipment diminished by 35.0% and 18.9% respectively, bringing total private investment down by 33.0%, which was attributable to the slowdown in construction of major tourism and entertainment facilities, as well as the high comparison base last year driven by construction. On the other hand, government investment decreased by 5.5% year-on-year, of which public construction investment fell by 6.5% while equipment investment grew by 91.1%. Merchandise trade continued to deteriorate. Slowdown in investment, as well as decline in private consumption and visitor spending, drove imports of goods down by 19.9% year-on-year; meanwhile, exports of goods dropped by 24.6% year-on-year. Service trade stayed weak. Exports of services contracted by 13.7% year-on-year, of which exports of gaming services dropped by 17.1%; besides, decrease in visitor spending brought exports of other tourism services down by 11.0%. Total exports of services declined year-on-year, while imports of services shrank by 4.8%.
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