Opinion – Dimming glow

Preliminary figures advanced by some casino observers suggest the gross gambling revenues during the national day week were lower than last year. Some suggest the total decrease may be above ten percent. If confirmed, these numbers will point to the consolidation of the trend observed in the cumulative gambling revenue so far this year.

That is not unexpected. Many, if not most of the factors driving the growth of this economy’s main activity, are working against further growth. At this point, it is difficult to identify when and from where a favorable wind might come back.

The composition of the region’s visitors means that anything that affects the mainland economy, in general, will have an impact on this side of the border.

The news from the Chinese economy indicates the persistence of slower growth. It may be difficult at this moment to gauge the longer-term effects of that slowdown on consumer confidence and spending patterns. But nothing indicates it will be reverted soon or that it might go back to previous levels, if and when they pick up again.

Further, China faces pressing challenges that will be there regardless of the general economic mood. As China grew and moved up the chain value, it started losing some of the advantages that helped the enormous growth in the last few decades. Other countries are trying to fill those spaces.

And faces stiff competition from established operators in most sectors where it is trying to build a strong or dominant position. Demographics are also going to start to bite, and significant asymmetries of income, both individually and regionally, may add further stresses.

If that was not enough, the level of uncertainty surrounding the world economy is growing. The global economy is showing signs of stalling, after several years of growth. The trade attrition between China and the United States is just one of the elements contributing to that trend. It is fueled as much by changing economic conditions as by political instability in several critical areas of the world.

Further, political instability in the neighboring SAR may be driving away visitors. That may have mixed effects in Macau, in general terms, as it will mean increased scrutiny of visitors by the authorities. Big players can do without much visibility at these times.

All these factors, and it is not an exhaustive list, points to a consolidation of the current trends, not their reversion.