Information from the Statistics and Census Service (DSEC) indicated that the economy of Macao contracted by 7.1% year-on-year in real terms in the second quarter of 2016, showing signs of improvement compared with the first quarter (-13.3%), mainly due to slower declines in service exports and investment, as well as a lower base of comparison in the previous year. External demand remained weak, as exports of goods fell by 24.7% year-on-year, a similar rate to the first quarter (-24.6%); exports of gaming services and other tourism services dropped by 12.0% and 7.4% respectively, less than the declines in the first quarter (-17.1% and -11.0%). Domestic demand saw continued slowdown, of which private consumption expenditure diminished by 2.2%, investment and imports of goods decreased by 15.2% and 16.2% respectively; meanwhile, government final consumption expenditure grew by 4.5%. The implicit deflator of GDP, which measures the overall changes in prices, rose marginally by 0.1% year-on-year. Residents tended to be cautious with their spending during the period of economic adjustment. Private consumption expenditure dropped by 2.2% year-on-year, similar to the rate in the first quarter (-2.3%). Expenditure on durable goods showed notable decline, revealing that households were relatively careful with spending on non-essential items. Household final consumption expenditure in the domestic market fell by 2.0% while that abroad rose by 2.2%. Government final consumption expenditure registered larger increase, expanding by 4.5% year-on-year, higher than the 1.5% growth in the first quarter. Compensation of employees and net purchases of goods and services went up by 3.0% and 7.3% respectively. Investment continued to decline, but at a slower pace. Gross fixed capital formation, the gauge of investment, contracted by 15.2% year-on-year, notably smaller than the decline in the first quarter (-31.9%). Investment was mainly dragged down by the decrease in private investment. Due to the successive completion of major tourism and entertainment facilities, private investment in construction and equipment shrank by 19.1% and 12.7% respectively, resulting in a significant drop of 18.4% in total private investment. On the other hand, government investment increased by 41.7%, of which public construction and equipment investment grew by 40.0% and 59.5% respectively. Merchandise trade remained sluggish. Private spending turned cautious while declines in investment and visitor spending lessened. Imports of goods decreased by 16.2% year-on-year, representing a smaller drop compared with the first quarter (-19.9%). Exports of goods fell by 24.7% year-on-year, a similar rate to the first quarter (-24.6%). Decline in service trade tapered off. Exports of services shrank by 9.5% year-on-year, lower than the 13.7% drop in the first quarter. Exports of gaming services and other tourism services diminished by 12.0% and 7.4% respectively, notably smaller than the declines in the first quarter (-17.1% and -11.0%). Meanwhile, imports of services reduced by 2.0%, lower than the 4.8% fall in the first quarter. In the first half year of 2016, the economy of Macao contracted by 10.3% in real terms. In terms of major GDP expenditure components, private consumption expenditure decreased by 2.3%, investment reduced by 23.5%, exports and imports of goods dropped by 24.7% and 18.1% respectively; exports and imports of services slid by 11.7% and 3.4%, of which exports of gaming services and other tourism services fell by 14.7% and 9.3% respectively; meanwhile, government final consumption expenditure rose by 3.1%, the only major expenditure component that registered growth.
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