Opinion – Wait and see

The latest figures for gambling revenue have raised some expressions of alarm. In August, revenue went down by more than eight percent, compared with the same month last year. April recorded a similar drop. 

The cumulative revenue during this year has been consistently below the numbers observed last year. However, the overall income for the full year up to August is just about two percent below the figures reached in 2018.

It was clear, from last year’s figures, that the recovery which started in 2016 was losing momentum. The trendline for the monthly results in 2018 was a flat one, indicating that the upward movement seen in the previous years was stalling. 

This year, that trend is pointing slowly down. It is highly plausible that the final figures will be lower than last year. By how much, will depend on the performance in the next two peak periods, the National Day week and the Christmas–New Year period. 

There are reasons for concern, but it is too early to panic. We tend to forget how extraordinary the level of Macau casino revenues is, and that, usually, there are ups and downs in all economic activities. 

However, it would be foolish to ignore that the economic and political winds are not the most favorable nowadays. There are broader reasons for apprehension, other than the slight contraction in revenue observed so far this year.

Several external factors contribute to raising the uncertainty surrounding Macau’s economy. Political and social instability in the region, and heightened tensions associated with the geopolitics of this part of the world, stand as potentially destabilizing factors.

Then, this economy’s financial performance hinges strongly on the flows of people and money from the mainland. Slower growth, uncertainty in the credit markets, and external trade frictions are additional concerns.

Then again, provided no significant disruption materializes, our concerns should be kept in perspective. This economy withstood the shock in 2014–15 when gambling revenues took a hit of almost epic proportions. Revenues plunged by about 40 percent. Anywhere else, that would mean serious social unrest. In the end, we went through it (almost) without major trouble.

Macau residents can count on two robust buffers in bad times. One, the non-resident workers. They will absorb most of the employment shock if there is one. Two, the public coffers. They are overflowing with extraordinary revenue generated by the casinos in the last 15 years.