Opinion – Crisis or not

A couple of weeks ago, the gambling revenue figures August led many to start a (small) soul-searching inquiry about a possible impending crisis. Compared with the same month last year, revenue tumbled by more than eight per cent.

It is not a meaningless number, but alone does not amount to much. Accumulated figures for the year tell a less dramatic story. Total revenue up to August was below the previous year record by about two per cent. 

These figures justify attention but not outright anxiety. Overall, the economic growth is stalling or receding a little, but production and income are still at very high levels by any standards. There is ample margin for adjustment, even a downward adjustment before some drama is justified.

Meanwhile, public coffers keep bulging. In the same eight-month period, data from the finance department just published shows that public revenue from gambling increased, compared to last year.

That is, although total gambling revenue contracted, the government receipts went up by about 1.5 per cent. With two-thirds of the year elapsed, the gambling revenue already exceeds three-quarters of the amount budgeted for the year. 

There are still two peak periods to go – the National Day week and the Christmas and New Year period. Bar some severe degradation of the economy’s external economic framework or a deepening regional crisis, and the outlook is still positive. The public accounts are heading for another vigorous surplus by the end of the year.

To put things in perspective, public income derived from gambling typically represents over 80 per cent of the total budget. Currently, revenues from gambling alone already match roughly the total current expenditure budgeted for the full year. Further, the execution of several items in the budget is neatly below the authorized values. 

There is a sort of tradition of underestimating gambling revenues; it is true. And, also, overestimating some expenditure. In particular, the capital budget execution is running below one-third of the budgeted number. Given the (chronic?) under-execution of the capital budget, the running surplus to August runs at twice the size it was foreseen for the full year. Even a late-year effort to spend is unlikely to change this picture much.

Moreover, bear in mind the surpluses accumulated for more than a decade. A (genuine) crisis, if and when it comes, will take time to be earnestly felt on the public purse. And that is yet another of the economic peculiarities of this land.