Contributions to GDP:Main sector
It is an obvious fact, and it is often stated, that the economy of Macau is mainly driven by gaming. Some people worry about this almost mono-dependence. It is therefore interesting to try to evaluate how concentrated  the local economy is and to grasp how it has been changing over the last few years.
Using a common indicator to analyze the concentration of markets, adapted here to the shares of the various sectors in the GDP, some features are readily apparent (Table 1). Note that the combined share of the top 4 sectors in every year gaming rose notably if compared with 1999 – the lowest point – but is not much above the values for the mid-90’s.
But, gambling, the undisputed leader of the pack, is becoming ever more so. In just over a decade, its share rose by more than 15% to more than half of GDP. That increase alone is bigger than any other sector. As a result, Table 2 shows a striking effect. The ratio between the gambling sector and the three next top sectors has risen wildly, from values below 1.5 in the last part of the previous decade, to values over 2.5 and, at times, closer to 3.5, in recent years. The economy is certainly becoming more polarized around that sector.
Table 3 shows, however, that other sectors have at times shown great dynamism. If we calculate the differences between average growth rate and the rates of the various sectors, we see that the picture is more diverse (Table 3). At different times other sectors have grown significantly above the average without any clear pattern occurring in the period. (Note that the boom in construction in recent years was so spectacular that if the value for 1995 was shown on the table, all the other series would be so compressed as to be undistinguishable). But, of course, even when it grows below the average, its contribution to the absolute growth of the economy dwarfs that of much smaller sectors with higher growth rates. Note that sector was, in this sense, an alternative driver of the economy in the timeframe shown.

The individual visa
From time to time, there is speculation about the changes in the mainland visa policy towards the region. Those changes have occurred often without warning and have been a source of concern in various circles. A lot has been said about the supposed effects of those changes in the number of visitors and, by extension, or so the argument seems to be, the economic growth of the region and in particular, the revenues of the gaming sector. The data has never been too favorable to those more or less mechanic connections. As time goes by, they seem to get weaker. Let us see why, using the quarterly data for the last two full calendar years, the ones for which all the data used here is comparable. Table 1 indeed shows indeed a sustained decrease in the number of visitors using the individual visa. That seems to confirm that a restricting policy has indeed been at work (although other reasons might also contribute to that effect). But, whatever the reason, such a decrease appears essentially unrelated in any significant measure to the volume of every category of visitors, and they represent a decreasing share of the total number of visitors. No effect is noticeable either at the level of hotel guests.
Table 2, makes it even more clear,
as the changes over time were measured in index form, allowing for a better comparison. That table shows that a clear, if any, relationship also fails to materialize concerning the level of expenditure by the Chinese visitors and the individual visa holding visitors. Again, no significant connection seems to exist between the changes in the number of individual visa visitors and the other variables.
Finally, as shown in Table 3, no effect is evident in relation to the expenditure patterns of the visitors originating from China. Neither the shopping expense, nor the non-shopping expenses, nor the per diem or daily expenses seem influenced by that factor. In sum, the changes in the individual visa policy do not show any relevant impact on either the volume of gambling revenues, the total number of visitors or hotel guests or the levels of expenditure of the Chinese visitors.
Too much ado…?

by José I. Duarte
Economist /Macau Business
Senior Analyst Data source: DSEC
Charts and graphics in our paper edition and MB online browseable