Macau: Economy

Macau's economy is based primarily on tourism, specifically casino gambling. The global financial crisis in 2008, combined with restrictions imposed by the People’s Republic of China that limited Chinese visitors to Macau, caused Macau to experience its first economic contraction since the gaming sector was opened to foreign investment in 2002. However, accelerating Chinese economic growth and relaxation of Chinese exit visa restrictions boosted Macau’s growth back into positive territory in the third and fourth quarters of 2009. In 2010, Macau’s economy grew at 17.2%, 31.5%, and 27.1% in the first, second, and third quarters, respectively. Textile and garment manufacturing, once mainstays of the Macau economy, have virtually vanished, and efforts to diversify the economy have had limited success. In 2010, Macau’s exports dropped by 9.3%, with exports to the U.S. falling by 40.2%. Macau is heavily dependent on imports. Imports surged by 19.6% in 2010, and the trade deficit increased to U.S. $4.6 billion. Gaming alone contributed almost 70% of GDP in 2009 and accelerated in the first 9 months of 2010. For the year, Macau gaming revenues totaled U.S. $23.5 billion, a 57.8% surge from 2009. Monthly gaming revenues topped U.S. $2.3 billion in January 2011. In 2010, tourist arrivals rose by 14.8% from 2009. Mainland Chinese tourists accounted for 53% of all tourist arrivals to Macau, with Hong Kong tourists accounting for 29.9% and Taiwan visitors about 5.2%.

Macau depends on mainland China for most of its food, fresh water, and energy imports. The European Union and Hong Kong are its main suppliers of raw materials and capital goods.

In the last few years virtually all of Macau's manufacturing operations, mainly textiles and garments, have moved across the border to mainland China. Mainland competition, along with the end of Multi-Fiber Arrangement (MFA) quotas in 2005, which had provided a near-guarantee of export markets, have augured the end of Macau's low-end mass production of textiles. While still accounting for 23.4% of Macau’s total exports, textile and clothing exports amounted to U.S. $203.4 million in 2010. For future growth, Macau is relying on becoming a regional center for gaming, tourism, conventions, and corporate incentive travel; foreign and local investors have aggressively expanded the casino, hotel, and restaurant sectors. U.S. investment has played a leading role in the development of Macau’s gaming and entertainment sector. According to the most recent Macau Government statistics, U.S. direct investment in Macau totaled U.S. $2.9 billion at the end of 2009, although unofficial numbers put the figure between U.S. $6 billion and $8 billion, making the U.S. Macau’s second-largest source of foreign direct investment after Hong Kong (U.S. $4.0 billion). Direct investment in Macau from mainland China (U.S. $1.3 billion) has been concentrated in the financial sector.

Sources:

CIA World Factbook (October 2011)
U.S. Dept. of State Country Background Notes ( October 2011)

Glossary