Macau Govt Expects Economy To Experience A Revival In 2017

Government officials in Macau believe that the city’s economy will soon experience a surge in growth based on the improving performance of casino operators who have changed their business strategy and are now focusing on mass market tourists and gamblers rather than VIP high rollers.

In a statement, Chief Executive Fernando Chui said,

Macau’s gaming industry and the whole economy will continue to adjust, but the decline may shrink to 7.2 percent this year and even resume growth in 2017. It’s a good time for Macau to re-position after a 25-month gaming revenue drop.

Speaking in a televised session of the city’s legislature Chief Executive Chui said that the government was working with the six casino operators in the region to bring a balance between gaming and non-gaming revenue activities. Macau’s Gross domestic product (GDP) dropped by 20.3 percent in 2015, a sharp decline versus the 0.9 percent drop seen last year.

The casino industry which accounts for half of the city’s GDP has witnessed plummeting revenues.

Casino revenue declined for the 25th consecutive month in June 2016, its lowest since September 2010. The decline was triggered when Chinese government initiated its crackdown on corruption and increased scrutiny which resulted in high rollers keeping away from Macau’s casinos.

Casino operators have been building new casinos aiming to attract mass market gamblers and mainstream tourists who are likely to be the main customer segment for the industry henceforth. The city has also urged casino operators to reduce the dependence on gaming revenue. It has set a target of increasing contribution of non-gaming revenue from 6.6 percent in 2014 to 9 percent by 2020.

The International Monetary Fund has predicted that the territory will reduce its decline in growth this year and will see a 0.7 percent rise in 2017. Recent trends indicate that the industry has stabilized in the past few months and a revival for Macau may soon be on the cards.

Sands China Ltd which operates four casinos in Macau reported in its second quarter results for this year that its mass-market revenue had increased for the first time in two years.

Chairman Sheldon Adelson has said that mass market gamblers are likely to drive further growth for the city.

According to Grant Govertsen, an analyst at Union Gaming Group LLC the opening of two new casinos, the Sands’ $2.7 billion Parisian casino and $4.1-billion Wynn Palace is likely to help turn the region’s casino revenue around.

Adrian Sterne

More articles by Adrian Sterne