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The fifth consecutive reduction of interest rate in US banks this year is expected to give an impetus to the recovering economy of China's Macao Special Administration Region (SAR).
Macao's banks will soon lower the interest rate correspondingly in the wake of the US announcement of the 0.5 percent interest cut on Tuesday, as the SAR's interest calculation has direct links with that of the United States, Xinhua learned Thursday from the Association of Banks of Macao.
Francis Tam Pak Yuen, the SAR's secretary for economy and finance, said in an interview with Xinhua that he is "confident" of the positive growth of Macao's economy despite the slowdown of the world economy in 2001.
He cited that the US interest cut will bring down the managing cost of Macao's enterprises and the industrial and commercial sector in general and help them raise more funds. "It is a piece of good news."
The domestic demand of the Unites States, the largest export market for Macao, will be pushed higher. The SAR's exports fell by nearly 10 percent year-on-year in the first quarter of this year, but "the situation will improve in the third and fourth quarters," Tam said.
The lower interest will play a positive role in Macao's real estate transactions as more people will draw their bank deposits to purchase houses and they will pay less for the daily care of their apartments, the official said.
Macao's banks will take the opportunity to develop non-interest business, such as stocks and bonds, to increase income, noted experts from the Association of Banks of Macao.
And many enterprises in the manufacturing sector, which is an economic pillar in Macao, plan to update their machines and equipment to take advantage off the lower interest rate.
The interest reduction, however, will influence consumers' confidence. Retail sales will make less contribution to the economic recovery, according to local economists.
The economic pick-up of Macao needs coordination of various factors, and the interest cut is just one of them, they said, suggesting that the SAR government further upgrade economic laws and regulations and strengthen practical cooperation with neighboring areas to attract more investment.
The weakening employment situation will offer room for another possible cut of interest rate in the US banks, meaning more opportunities for the Asian economy, said Kang Lixian, managing director of the Derson Global Corp.
Statistics show that Macao's gross domestic product (GDP) went up 4.6 percent year-on-year in 2000, ending the negative growth for four straight years. The improvement was mainly attributed to the bulk increases of cargo exports and the number of tourists.
(Xinhua 05/17/2001)
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