Economy of Macau

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Economy of Macau
Boao Forum, The Forum for Economic and Trade Co-operation between China and Portuguese-speaking Countries ( Macao) and ICC
etc.
Country group
Statistics
PopulationIncrease 657,647 (2021)[6]
GDP
  • Increase $50.55 billion (nominal, 2023 est.)[7]
  • Increase $90.46 billion (PPP, 2024 est.)[7]
GDP rank
GDP growth
  • 27.2 % (March 2024) 4.7% (2018)
  • −4.7% (2019)[7][8] −52.3% (2020e)[7]
GDP per capita
  • Increase $70,130 (nominal, 2024 est.)[7]
  • Increase $125,510 (PPP, 2024 est.)[7]
GDP by sector
3.005% (2018)[7]
Population below poverty line
NA[9]
35 medium (2013)[9]
Labour force
  • Increase 388,620 (2019)[11]
  • Decrease 70.9% employment rate (2016)[12]
Labour force by occupation
  • agriculture: 2.5%
  • industry: 9.8%
  • services: 4.4%
  • industry and services: 12.4%
  • agriculture/fishing/forestry/mining: 15%
  • manufacturing: 25.9%
  • construction: 7.1%
  • transportation and utilities: 2.6%
  • commerce: 20.3%
  • (2013 est.)[9]
UnemploymentSteady 1.7% (Q2, 2019)[13]
Main industries
tourism, gambling, clothing, textiles, electronics, footwear, toys
External
Exports$1.45 billion (2018 est.) [14]
Export goods
clothing, textiles, footwear, toys, electronics, machinery and parts
Main export partners
Imports$11.55 billion (2016 est.)[9]
Import goods
raw materials and semi-manufactured goods, consumer goods (foodstuffs, beverages, tobacco, garments and footwear, motor vehicles), capital goods, mineral fuels and oils
Main import partners
FDI stock
  • Increase $18.91 billion (31 December 2011 est.)[9]
  • Increase Abroad: $1.166 billion (2012 est.)[9]
Increase $16.75 billion (2017 est.)[9]
Steady $0 (31 December 2013)[9]
Public finances
Steady 0% of GDP (2017 est.)[9]
Revenues14.71 billion (2017 est.)[9]
Expenses9.684 billion (2017 est.)[9]
Increase $20.17 billion (31 December 2017 est.)[9][note 2]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

The economy of Macau has remained one of the

social welfare program of 15 years of free education to all Macau citizens.[18] In 2015, Macau's economy saw a sharp decrease (-26.4% year-on-year in Q2 2015) due to the reduced spending by visitors from Mainland China since the Anti-corruption campaign under Xi Jinping.[19]

During the first three-quarters of 2007, Macau registered year-on-year GDP increases of 31.4%.[15] A rapid rise in the number of mainland visitors due to China's easing of travel restrictions, increased public works expenditures, and significant investment inflows associated with the liberalisation of Macau's gaming industry drove the five-year recovery. The budget also returned to surplus after 2002 because of the surge in visitors from China and a hike in taxes on gambling profits, which generated about 70% of government revenue. The Hong Kong dollar is itself a reserve currency for the Macanese pataca, which is pegged at the official rate of around 1 Hong Kong dollar to 1.03 Macanese pataca.[20]

History

Macau was a barren fishing village with a population of about 400 before the

coolies (slave labourers) as a transit port, shipping locals from southern China to Cuba, Peru, and other South American ports to work on plantations or in mines.[22]

Fishing re-emerged as a dominant economic activity in Macau as it lost its position as a regional trading center. In the early 1920s, over 70% of Macau's 84,000 residents were engaged in fishing.

Sociedade de Turismo e Diversoes de Macau (STDM), a syndicate jointly formed by Hong Kong and Macau businessmen, the monopoly rights to all forms of gambling. The STDM introduced western-style games and modernised the marine transport between Macau and Hong Kong, bringing millions of gamblers from Hong Kong every year.[21]

In the 1970s Macau also saw a rapid development in its manufacturing sector. With Macau's low-cost operating environment and its surplus quotas under the

Multi Fiber Arrangement (MFA), many Hong Kong industrialists established textile and garment manufacturing bases in Macau. At its golden age in the 1980s, the manufacturing sector accounted for about 40% of Macau's GDP; textiles and garments accounted for about 90% of Macau's total visible exports.[21]
However, the manufacturing sector has experienced a gradual decline since the early 1990s due to phasing out of the MFA quota system and the rising labour costs relative to mainland China and Southeast Asian countries.

Economy of Macau
Currency and identity
Resources
Companies
Other Macau topics

Labor and employment

Employed population by occupation 2007[24]
Occupation No. in thousands
Senior officials/managers 14.6
Professionals 9.9
Technicians 28.1
Clerks 83.7
Service & sale workers 63.2
Workers in agriculture/fishery 0.8
Craft & similar workers 33.7

The work force in Macau is mainly composed of manufacturing; construction; wholesale and retail; hotels and restaurants; financial services, real estate, and other business activities; public administration and other personal and social services, including gaming; transport, storage and communications. Due to the double-digit economic growth in recent years, the

unemployment rate dropped from the record high 6.8% in 2000 to 3.1% in Qtr 3, 2007.[25]

With the opening of several casino resorts and other major constructions underway, it is reported that many sectors, especially the construction sector, experience a shortage of labour. The government responds by importing labour from other neighbouring regions, including mainland China, Hong Kong, the Philippines and India. Currently the number of imported labours stands at a record high of 75,391 (Q2 2007), representing more than a quarter of the labour force in Macau.[26][27] Some local workers complain about the lack of jobs due to the influx of cheap imported labour. Some also claim that the problem of illegal labour is severe.[28] Another concern is the widening of income inequality in the region: Macau's Gini coefficient, a popular measure of income inequality where a low value indicates a more equal income distribution, rises from 0.43 in 1998 to 0.48 in 2006. It is higher than those of other neighbouring regions, such as mainland China (0.447), South Korea (0.316) and Singapore (0.425).[29]

The monetary system

BNU Tower in Macau.

Macau adopts the so-called currency board system under which the legal tender, pataca (MOP), is 100 percent backed by foreign exchange reserves, the Hong Kong dollar (HKD). Moreover, the currency board, Monetary Authority of Macao (AMCM), has a statutory obligation to issue and redeem pataca on demand against Hong Kong dollar at a fixed exchange rate and without limit. The pataca is pegged to the Hong Kong dollar at a rate of 1.03 MOP per HKD, which is maintained by the AMCM.[30]

Each pataca divides into 100 avos. Coins are issued in 10, 20, and 50 avos and 1, 2, 5, and 10 patacas (2 and 10 patacas coins are rarely used in the territory); notes are in 5, 10, 20, 50, 100, 500, and 1000 pataca denominations. Hong Kong dollar is freely used and accounts for more than half of the total deposits in Macau's banks.

Chinese yuan is also widely accepted. Two banks issue currency: the Banco Nacional Ultramarino and the Bank of China
(starting from October 1995). The historical exchange rates between the pataca and the US dollar (USD) are given below.

MOP per USD Period
8.01 2000
7.99 1999
7.98 1998
7.99 1997
7.962 1996
8.034 1993–95

Trade

In 2003, China's Ministry of Commerce established Forum Macao in 2003.[32]: 62  The Forum's objective is to increase economic ties between China and the Portuguese-speaking countries.[33] Its permanent secretariat is located in Macau.[32]: 62–63 

In 2011, Macau's market economy produced total exports of US$1.119 billion (MOP 8.94 billion) and consisted mainly of clothing, textiles, footwear, toys, electronics, machinery and parts. Total imports for the same period reached US$8.926 billion (MOP 71.32 billion), and consisted mostly of raw materials and semi-manufactured goods, consumer goods (foodstuffs, beverages, tobacco), capital goods, mineral fuels and oils. Macau's primary export partner in 2011 was Hong Kong (44.6%). Other exports go to Mainland China (15.9%) and United States (7.9%). Macau import partners are Mainland China (30.4%), Hong Kong (12%), France (10.4%), Switzerland (7.5%), Italy (7.5%), Japan (6.2%), and United States (6.1%).

In the second half of the 20th century, Macau's economy was diversified with the development of light industry, the influx of migrants from mainland China to serve as a labour force, and increased tourism. Portugal's efforts to develop economic and cultural links between Macau and Brazil and Portuguese holdings in Africa, however, were not successful. Economic ties to the

free port
and as a separate customs territory.

Sectors

Tourism and gambling

Main articles: Gambling in Macau and Tourism in Macau
Macau Tower at night.
Visitor arrivals by place of residence in 2006[34]
Place of residence No. of visitor arrivals
(in thousands)
Mainland China 11,985.6
Hong Kong 6,940.7
Taiwan (ROC) 1,437.8
Southeast Asia 693.4
Total 21,998.1

Tourism is the backbone of Macau's economy, and much of it geared towards gambling, which was legalised in the 19th century and has since been the linchpin of the economy and an important source of revenue for the government. As of at least 2015, 90% of tourist revenues in Macau are derived from gambling.[35]: 22  For the Macau government, taxes derived from the table game of baccarat are the largest single source of public funds.[35]: 22 

From 1962, the gambling industry operated under a government-issued monopoly licence by

MGM Grand Macau
in 2007.

In addition, other casino owners, including Australian

Galaxy Entertainment Group have also opened several hotel casinos in Macau. As a result of the surge in number of casinos and construction from other new casino entrants, Macau's economy has grown rapidly, and gambling revenues from Macau's casinos are now greater than those of Las Vegas Strip,[37] making Macau the highest-volume gambling center in the world.[38]
Numerous other hotel casinos, including Galaxy Cotai Megaresort and Ponte 16, are also to be opened in near future.

Casino Lisboa
The interior of The Venetian Macao

Due to the opening of the new hotel casinos and China's easing of travel restrictions, there has been a rapid rise in the number of mainland visitors. From 9.1 million visitors in 2000, arrivals to Macau has grown to 18.7 million visitors in 2005 and 22 million visitors in 2006, with over 50% of the arrivals coming from mainland China and another 30% from Hong Kong.

World Tourism Organization.[41]

Because Macau benefits from favorable taxation rules, it is a favored location for tourists from elsewhere in China to purchase luxury goods like cosmetics, jewelry, and designer fashion goods.[35]: 116 

Manufacturing

Macau's manufacturing industries emerged in the first few decades of the 20th century, which mainly consisted of junk building, factories for matches, firecrackers and incense. Modern industries, however, did not take off until the 1970s when the textiles and garments industry was rising rapidly, while other light industries such as plastics, electronics, toys, and artificial flowers also experienced respectable growth. Textiles and garments further increased its dominance in the manufacturing sector towards the end of the 1980s.

Much of Macau's textile industry has moved to the mainland as the

Multi-Fiber Agreement
is phased out. The territory has relied more on gambling and tourism-related services to generate growth.

Banking

Macau is an

free port with no foreign exchange control regimes.[42]
Moody's Investors Service upgraded Macau's foreign and local currency government issuer ratings to 'Aa3' from 'A1', citing its government's solid finances as a large net creditor. The rating agency also upgraded Macau's foreign currency bank deposit ceiling to 'Aa3' from 'A1'.[47]

There are twenty other licensed banks, sixteen of which are foreign. Macau has five of the top 500 commercial banks in Asia, including Banco Tai Fung and Industrial and Commercial Bank of China.

Construction

Ponte 16 under construction

In 2014, the construction sectors in Macau engaged 45,368 people. The value of construction was MOP78.15 billion, in which MOP66.88 billion belong to the private sectors. The intermediate consumption was MOP61.03 billion and labor cost was MOP11.35 billion.[48]

Transportation companies

Air Macau is Macau's Flag carrier and is based out of Macau International Airport.[49]

Media

Macau has reportedly the highest "media density" in the world - nine Chinese-language dailies, three Portuguese-language dailies, two English-language dailies and about half a dozen Chinese-language weeklies and one Portuguese-language weekly. About two dozen newspapers from Hong Kong, mainland China, Taiwan and the Philippines are shipped to Macau every early morning.

Economic diversification

The large role of gambling and tourism underscores a degree of risk for Macau's economy. Because the economy is so reliant on tourism and gambling for its well-being, if the flow of tourists slows, it could come as a shock to the small market. The push for diversification came in the closing years of Portuguese administration, under Governor General Vasco Rocha Vieira, and has continued to the present, under Chief Executive Edmund Ho. The government is seeking foreign investment as a means of economic diversification as well. Much of the foreign investment into Macau, however, has gone into the gaming sector after the end of the monopoly in 2001. Otherwise, foreign companies have entered into the mobile phone market and internet services after telecommunications market liberalisation in 2001.

Political economy and social welfare

Prior to the 1930s Macau had a

counseling.[54]

The Social Welfare Bureau – which remained to this day - was established after the handover to China in 1999. Initially Macau faced challenges from a weak economy and high

healthcare is universal and offered in public hospitals but private services is also subsidized by 30%, for pregnant women, students, civil servants and people 65 and above, it is completely subsidized. The government extend benefits for many of these citizens.[56] Improvements in the rise of employment and income is also linked to higher satisfaction with quality of life.[57] The government provide 15 years of free education, social insurance and social assistance to all citizens. Similar to a lot of East Asian countries, the social welfare model in Macau does not fit neatly in "the three worlds of welfare capitalism". It has been argued that it functions more like a regulatory welfare regime.[58]

Nevertheless, Macau's

GDP growth of 17% the year prior.[61]

Energy

Main articles: Electricity sector in Macau and Energy in Macau
Coloane A Power Station

Electricity – production: 1.893 billion kWh (2004)
fossil fuel: 100%
hydro: 0%
nuclear: 0%
other: 0% (1998)
Electricity – consumption: 1.899 billion kWh (2004)
Electricity – exports: 0 kWh (2004)
Electricity – imports: 153.3 million kWh (2004)

See also

References

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  8. ^ "【內外夾擊】澳門上季經濟按年勁縮8.1%". 東網ON.CC. 東網ON.CC. 29 February 2020. Retrieved 7 March 2020.
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  42. ^ Luis Pereira. "Offshore Operation in Macao". Macau Business. Retrieved 5 September 2007.
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  54. ^ ""Development History." Social Welfare Bureau of MSAR Government". Instituto De Accao social. Archived from the original on 31 May 2019. Retrieved 8 December 2017.
  55. JSTOR j.ctt1xwg2h.20
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Notes

  1. ^ The UN does not calculate the HDI of Macau. The government of Macau calculates its own HDI.
  2. ^ the Fiscal Reserves Act that came into force on 1 January 2012 requires the fiscal reserves to be separated from the foreign exchange reserves and to be managed separately; the transfer of assets took place in February 2012

Further reading

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