José I. Duarte

Economist, Senior Economic Analyst for Macau

As the saying goes, you can never step into the same river twice. Even if there are no truly turbulent times, the economy and society are constantly changing, not always in obvious ways, as new things happen and people change and adapt. Don’t expect Macau’s economy in 2024 to be the same as it was five years ago.

Moreover, given the serious disruption caused by Covid, it would be asking too much to expect local economies to simply restore the processes disrupted during the pandemic years. Many things have changed and are affecting the decision-making structures and behaviors of people and institutions.

But even if we accept the impermanence of all things, we long for a certain sense of continuity. The past, however different it may be, helps us to recognize where we come from and where we are.

It may therefore be useful to compare the figures on some important – in some cases critical – aspects of the economy now and in the past. Halfway through the second “recovery year” we have reached: what can the current figures tell us if we look back to 2019 as a benchmark?

No other indicator is perhaps more important than gambling revenues. They are, directly or indirectly, the driving force behind most economic activity. We could assume that during the Covid period, much of the demand fell and that once the “gates” opened, much of it would find its “natural” destination here. In fact, gambling numbers recovered relatively quickly.

In the first half of this year, they seemed to stabilize at a level of about 80 percent of previous levels. It is possible, even likely, that part of the difference reflects the changing profiles of players and their spending. If this is the case, the evolution of these profiles in the coming months will be of great interest in assessing the evolution of the sector and, consequently, of the Macau economy.

The number of visitors, another important indicator, was also slightly above 80 percent of the previous figure in the first half of the year. This percentage is relatively stable for the different categories of visitors, regardless of their origin. However, the ratio between day visitors and overnight visitors has hardly changed, which generally suggests that the reasons and motivations for visiting Macau have not changed significantly.

Rather, the number of visitors from the Greater Bay Area has increased, which may indicate an increasing dependence on visitors from neighboring areas, potentially cementing the dominance of day-trippers.

In a challenging development that is worthy of further study by both academics and policymakers, visitor spending per capita has increased significantly. To varying but always significant degrees, the increase is visible in all types of spending that have nothing to do with gambling. As a result, and this is of great interest to other companies, overall retail sales are at similar levels to before, despite the decline in visitor numbers.

Relevant changes are also taking place in the labour market. Unemployment and underemployment rates among residents are back to levels comparable to those of 2019; the same is true for median labour income. However, the employment rate of residents is lower than before; if we take into account the relative ageing of the local population, it could fall further even in an economic recovery. This will increase the pressure to hire non-residents, whose numbers are now approaching pre-crisis levels, and could reignite the fears and disputes that the issue previously provoked.

For all these reasons, we should pay close attention to the figures released in the coming months, as they could provide insight into whether the economic recovery is stabilising and the economy is moving towards a different growth model.