Macau Opinion | Oracles

One of the big topics of the moment (still) is the relative recuperation of casino revenues and the growth expectations for the year that has just started. There is a lot of excitement about this issue, which surely has impacted balance sheets and share prices, not to mention the life of ordinary residents. What can we make of it?

We know now that last year’s growth settled at 19 per cent. After three years of contraction, any growth is good news for the sector, and the many local businesses whose profit lines depend directly or indirectly upon it. But how good is it, what does that figure mean? That we are going back to the previous regime? A bit of context is necessary. For all the hype these kinds of numbers often elicit, an isolated figure is rarely meaningful. As a matter of fact, in this as in other settings, discrete statistics are virtually meaningless.

Remember that in the three previous years annual revenue had dropped by about 40 per cent. Monthly revenues in the first half of 2016 were still mostly in line with the levels of late 2010. It is as if our peg in this game was moved back by some four to five years. Had the revenues kept growing at rates similar to the ones seen in 2010-13, annual revenue for 2017 would have reached a value in the neighbourhood of MOP600 billion. That is, 2.25 times more than the actual 2017 score.

We are now dealing with a lower growth rate than before, calculated over a smaller base. Going back to the previous regime would mean that next year growth would have to be closer to what it was in 2011 (over 42 per cent then), well above that of last year. It is too early to assume that evolution.

Moreover, it was the fast growth in those earlier years – or, to be more precise, the drivers of such growth rates – that triggered the actions that put a halt on that lucky stream. A reminder, if one was needed, that most critical factors affecting the sector growth lie beyond the powers of local agents, public or private.

Therefore, genuinely plausible forecasts would seem to require that practitioners have access to the gods’ will and are granted access to some insider information. In that sense (at least) many predictions about growth should be understood more as guesses or wishes – disinterested or less so – than reliable forecasts.