Macao 2017 Economic Report

Executive Summary

The pace of Macao’s economic growth accelerated significantly in 2017 after a steep contraction of 18% in 2015 and zero growth in 2016. Driven by the rapid expansion of external demand, GDP grew by 9.1% in real terms in 2017. Export of services and import of services rose by 17% and 13% respectively year-on-year. Unemployment rate was 2% whereas inflation rate rose by 1.2% in 2017.

The tourism industry relies heavily on tourists from Mainland China. Total visitor arrivals rose by 5.4% to 32.6 million or 50 times the size of local population. Accounting for 68% of total visitor arrivals, visitors from Mainland China rose by 8.5% to 22.2 million.

The gaming industry is the major driving force for Macao’s economy. Owing to economic slowdown and anti-corruption measures in Mainland China, gross revenue from gaming dropped sharply in 2015 and 2016. Gaming industry rebounded strongly whereas gross revenue grew to US$ 33.3 billion (+19% year-on-year) in 2017. Such a trend continued by recording a growth of 22% in the first four months of 2018.

Typhoon Hato hit Macao in August 2017, killing 10 people and injuring over 240 others, as well as resulting in economic losses about US$ 1.6 billion. It exposed Macao’s shortcomings in administrative competence and infrastructure facilities particularly flood control. At present, the Macao SAR Government is stepping up efforts to advance Macao’s overall capabilities for disaster prevention or mitigation of the effects of disaster. The work comprises: amendment to the Civil Protection Law; the formulation of a 10-year plan for disaster prevention and mitigation (2019-2028); construction of major fundamental infrastructure and the establishment of a new command system for the management of public emergencies. 

Both the Beijing Government and the Macao SAR Government are aware of the fact that Macao’s over reliance on gaming industry will make the economy of Macao more vulnerable and fluctuating. Therefore Macao is now placing more emphasis than before on development of non-gaming tourism. The Macao SAR Government aims to turn Macao into a destination for regional tourism, leisure gaming, convention and exhibition with international standard. It is currently reviewing the renewal of casino licenses which will expire in 2020-22. Non-gaming commitments will be reportedly one of the important factors to consider the renewal of casino licenses.

As witnessed before, the biggest potential downside threat against Macao comes from policy risks of Mainland China such as anti-graft measures, control on capital outflows and etc.

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