The Macau casino industry has been in a state of decline of a prolonged period. This follows over two years of almost continuous growth, but this phase has ended. Now, the decline is clear in the city’s many different business fields. The Director of the Statistics and Census Service or DSEC shows that the casino industry GDP contribution is down about 0.6 percent in comparison with 2018.
The result is a clear economic impact across the enclave. The entire GDP is now about 3.2 percent smaller than that of the previous years. This is the first time this metric shrank ever since 2015. Data shows that the tourism numbers have been up recently, but this is not having an impact on the overall economy. The hospitality service, without the casino tourism, also show a drop of 0.3 percent in GDP.
At the same time, the local government is considering ideas like the tourist tax to help Macau’s infrastructure cope with rising visitor numbers. The sheer lack of money in the city means that the overall investment is also down. Reports show a figure of 32 percent less investment funds in the Q1 of 2019. The report explains that the weakened total demand came about thanks to feeble growth, which is now, in turn, adding more pressure on the economy.
The downturn is not a big surprise to anyone who has been following the Macau gambling scene in the past 12 months. The casino industry there took a big hit as the direct result of the US and China trade war. This crunch resulted in a drop of Chinese high-rollers coming to Macau, leaving many casinos high and dry of an important source of profit. This is especially true for a number of businessmen from the manufacturing domain, who are directly impacted thanks to the trade tensions.
Yet, what is even more worrying for so many in Macau is the tourism issue. For some time now, the enclave has tried hard to expand its tourist offer outside of casino gambling. In this regard, Melco is probably the most advanced operator. But, the jump in the numbers, even though it did take place, has not helped the territory’s GDP.
The city is slowly becoming packed with mass-market tourists but their spending is not enough to help the economy. It looks that for now, the fortune of the enclave is directly connected to the Chinese VIP market.
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