Opinion – Riding the waves

This week marks a turning point for the coronavirus epidemic. The city starts moving back to some sense of normalcy. Several unknowns remain, however. The crisis is not over, and its full impact cannot be fully gauged. Guesses about how much it has already cost – or will have cost when all is over – are fraught with uncertainty. 

The impact is bound to be significant by any standard. Gambling and tourism, the twin sisters of our prosperity, have come to a standstill. Revenues tumbled inevitably. The impacts on the labor market and the supply chain of many businesses will become increasingly apparent in the coming weeks. 

A full recovery may take months, and some companies may not survive that long. But, again, it still too early to speculate with confidence about the full extent or duration of the unavoidable recession.

As we all are aware, most of the factors that decisively affect the city’s economic performance are external. In many ways, we have to adapt to them, more than we can influence them.

Gambling revenues and tourist flows are dominated by the economic conditions in the mainland and the behavior of its citizens. Loads of uncertainty hang over both. 

The full impact of the crisis in mainland China goes deeper and will take longer than in most other places. How that will affect the spending behavior of both families and businesses, there is an open question.

But their impact will likely be felt for many months. The next two main sources of visitors, Hong Kong, and Taiwan, have also been affected. In the latter case, the current crisis came on top of several months of instability. The economic momentum, so to speak, was broken. 

As it has been pointed out several times, Macau had a long lucky streak, which allowed the accumulation of a sizeable reserve. It places us in the enviable position of having the means to mitigate the short-term impacts of this predicament.

Government measures go into that direction. But there is only so much a government can do in times like this. The ‘business as usual’ mode is not for tomorrow. Let us then be ready for a possibly protracted recovery.

Not that we should complain too much, even if the situation might justify it. When the wave rises, we ride it. When it breaks, we hold on. That’s in the nature of this singular economy of ours.