Macau posted a 26.4% drop in its gross domestic product for the three-month period ended June 30. This was the biggest decline in GDP in more than a decade.
Macau officials attributed the considerable decrease to the city’s struggling gambling industry. Gross gaming revenue from Macau’s casinos has been dropping for the past 14 months. In other words, May 2014 was the last month that gambling operators posted a growth in their gaming proceeds.
The administrative region is the only Chinese territory where casino gambling is allowed. A total of 6 major casino operators currently provide their services at more than 35 venues across Macau. It could be said that the city is heavily reliant on its gaming industry.
The Macau Statistics and Census Service attributed the contraction in GDP mainly to the drop in exports of services. Gambling operations are part of exports when GDP is calculated, thus reflecting tourists’ expenditure at the administrative regions’ gaming venues.
The figures posted by the Statistics and Census Service show that exports of gambling services offered in the city plunged 40.5% during this year’s second quarter. Exports of all other tourism-related services decrease 21.5% year-on-year.
Last month, the Monetary Authority of Macao pointed out that the city’s GDP may eventually contract to “mid-teens” for the whole year. The regulator said that it all depends on the performance of Macau’s casinos during the second half of 2015.
Gaming revenue reported by the city’s gambling venues dropped 37.4% year-on-year during the three months ended June 30, 2015. Proceeds from VIP baccarat decreased 42.2%. Revenue from mass market gambling options contracted 30.2% during the period in review.
As mentioned above, July has been the 14th consecutive month when a drop in casino proceeds was posted. Analysts have pointed a number of reasons for this but many consider the stringent anti-corruption measures introduced by Chinese President Xi Jinping the main contributor to the current state of affairs in Macau. The anti-graft campaign imminently resulted in many high profile players from Mainland China withdrawing from the world’s biggest gambling hub.
Macau’s gambling operators are expected to launch several new expensive facilities over the next two years. And those will be oriented towards mass market gambling customers and non-gambling ones as part of the city government’s recently introduced strategy for making the territory less dependent on its casinos.
