Macau Business | February 2022
By José I. Duarte | Economist, Macau Business Senior Analyst
Few people will question that the Macau economy is one of a kind. Possibly almost since as far as living memory can take us, it has been customary referring to its distinctive characteristics, observed or presumed, as the local “idiosyncrasies.” Indeed, the expression might sometimes be interpreted with a whiff of irony, as if stressing the peculiar, if not odd, or eccentric side of a particular feature under observation.
Clearly, the local economy has distinctive aspects that it would be unwise to dismiss, whatever we may think about them. Of course, many factors contribute to that: history, geography, social composition, economic structure, all bring something unique to the city. The outcome is that some aspects of Macau’s economic behaviour and performance may not be easily compared to other places. Especially if we are talking about bigger, more complex, and diversified economies, or what we might call, in some measure, more ‘complete’ economies (if the expression is allowed.)
We deal with a small enclave economy, highly specialized in a few activities, and almost wholly depending on tourism and gambling. That is, the idiosyncrasies exist and must be factored in our analysis. They should be explained and become part of understanding the workings of the economy and society. They may call for less adherence to formal models of analysis, which are possibly more adequate to the observation of other places. Otherwise, we are condemned to note the singularities without necessarily grasping their causes or consequences.
Recognizing their existence alone does not have a strong explanatory power. Not much deeper, anyway, than the one often articulated in the common expression ‘Macau sã asi’ (‘that’s Macau’, in a free translation). An expression that often purports to ‘explain’ a lot without really clarifying much. Suitable for a smile of complicity and argument closure, maybe, but hardly explicative or illuminating.
This long introduction suggests that some of the unexpected or uncommon features of the local economy deserve more attention and study and may call for alternative frames of observation and analysis. Under the common observation tools, some features may be hard to explain.
For instance, it is patent that the drivers of the economy are jammed. Both gambling revenues and visitors’ flows are just a fraction of the figures we got accustomed to. Successive recovery expectations over the last two years or so fell short. Even the better figures seen around some of what used to be the peaks of activity failed to re-ignite the growth engine in any meaningful way.
Yet, unexpected data keeps flowing from the official statistics. The labour market is a case in point. The economy’s main sectors are sputtering, non-residents workers number is going down, the population is aging, there is anecdotal evidence of population outflows, the labour participation rate is decreasing – yet total employment figures are essentially holding out. While higher than in pre-pandemic years, the unemployment and sub-employment rates both appear still very low given the overall economic conditions.
Further, official data suggests that housing prices, at least for acquisition, seem insensitive to these unfavourable economic trends. The wages median seems as resilient, mostly resisting the headwinds. Surprising figures show up in retail and other activities supposedly depending, in no trivial measure, on the ebb and flow of tourists.
Other considerations aside, all this suggests there is no standard formula for the way ahead. Returning to the earlier status quo is not viable. But that alone does not guarantee the feasibility or adequacy of all alternative proposals under consideration. Returning to health may require more ‘customized’ prescriptions than we may sometimes realize – but that’s our homework.