Macau under the microscope
MACAU – – Macau’s long-term growth outlook remains bright, although prospects for growth in the short term have deteriorated significantly according to the Economist Intelligence Unit Outlook for Macau for 2009-2010.
The Economist report said the situation had deteriorated significantly “resulting from the halting of construction on several major casino resorts in the wake of the global credit crisis and the Chinese government’s decision to tighten visa restrictions on mainland Chinese wishing to visit the city”.
“Real GDP growth has slowed markedly in recent quarters, with the year-on-year rate of growth slowing to 11.3 percent in the third quarter of 2008, from 32.3 percent in the first quarter,” the EIU noted.
According to the report released at the end of 2008, “the moderation has been largely driven by a major contraction in investment.
A reduction in services exports owing to stalling casino revenue growth and an exacerbation of the investment slowdown from the second half of 2008 will result in overall economic growth moderating further”.
The document also noted that “rapid economic growth since 2004 has coincided with the unveiling of new tourist attractions and casino resorts in Macau, but there will now be a longer wait for some new attractions.
It could be a welcome gap, however, as Macau has been straining under the load of the visitor influx, and the city now has some breathing space to address infrastructure bottlenecks”.
The EIU also said that “the properties that have already opened – particularly the massive US$2.4 billion 3,000-suite Venetian Macao casino resort, which is unprecedented in scale in Macau and the rest of Asia – and will continue to draw visitors to the city”.
The analysis also considers that “the non-gaming side of Venetian Macau has yet to hit its stride, and the territory remains primarily a day-trip market reliant on gambling.
“Non-gaming revenue makes up a mere 5 percent of casino-resort revenue in Macau, compared to 50 percent in Las Vegas, but the string of new properties set to open over the coming 18 months have clear potential to bring Macau closer to the Vegas model”.
The EIU report noted that “another driver of growth will be the rise of more diversified leisure and business tourism in the city, with trade shows and conferences in particular likely to be a focal point”.
“Infrastructure bottlenecks remain a concern, especially as approval for new projects has slowed dramatically in the wake of the high-profile sentencing of a former secretary for transport and public works, Ao Man-long, to 27 years imprisonment on corruption charges,” it added.
The EIU report concluded by saying that “the government is not short of funds thanks to soaring gambling tax receipts,” adding that “pressure and assistance from powerful tourism and gaming interests will see the infrastructure bottlenecks addressed, although Macau is still likely to suffer significant growing pains over the coming years.”
Source: Macau News
Ian Jarrett
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