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Macau Helping China Fight Off Shrinking Economy

Penny January 4, 2024

In terms of political stability and economic certainty, the 2020s have largely been an unhappy period. In Europe, Brexit saw one of its major powers falter economically, the coronavirus pandemic helped disrupt almost every industry possible, and fractious political landscapes have popped up globally. One industry that definitely felt this pain was the in-person, brick-and-mortar casino market. However, in one part of Asia, it is the casino floor that is helping a future powerhouse stave off an impending economic misstep that could derail its ambitions to become the number one in world Finances. Are we going to see a renaissance in the gaming venue inspired by Macau’s influence on China as a whole or is this purely an anomaly that shines a light on a more concerning global trend?

Chinese Yuan - Macau helps economy

Not Yet Pre-COVID Spending but Rapid Increase

As a special administrative region of China, Macau claims a peculiar status as the legal gaming hub for the Chinese government. Because of this, it remains a popular destination for travelers across Asia and further afield. In a year where China’s economy continued to struggle in the wake of post-lockdown consumer spending drops, it was this tourism and spending that helped avoid a devastating slump. According to reporting by Bloomberg, the sector saw a revenue increase of more than 400%, which saw it return to around 60% of the levels experienced prior to COVID-19 restrictions. Obviously, this will still be some way off what officials in the country will want to see but it represents a promising return to profitability in a part of the world that took a much more heavy-handed approach to dealing with the pandemic and the strict closure of businesses and freedom of movement.


At this moment in time, though, concerns will remain around the wider economic signals in China as it experiences a property market crash. Instead of investment in longer-term products, consumers are reportedly looking for entertainment in their spending, which is why the gaming industry appears to be growing. However, that will likely change should consumer spending ability drop off a cliff due to income uncertainty. As such, it is not clear whether this recent uptick will continue indefinitely or follow a rockier path. Ever since China looked to push out the high-rollers from Macau, the spending has been down and 2023 was no different. Despite achieving an impressive end to the final quarter in December, figures were still down across the year. So, while there has been a clear indication of a corner being turned within the gaming industry in Macau, it is not necessarily suggestive of long-term recovery. 


Growth Set to Slow in New Year for Macau

2024 may just be upon us but experts are suggesting that the impressive boom that the casino industry experienced at the end of 2023 will slow in the coming 12 months. Seeking Alpha reports that it is likely that results will normalize when compared to December. It also notes that the operators in the region will now have to increase their investment in non-casino enterprises. As the casino companies posted such strong figures in the last quarter of the year, a stipulation by the Chinese government means that they must increase their investments by 20%, a significant jump up for any business. However, it is also believed that this had been predicted by those in charge of the casinos and that they will have plans in place for a steady increase in non-gaming spending without negative impacts on growth and impressive performance. That will need to be true for any company that is suddenly required to divert some of its funding to other sectors.


If the growth continues, though, Macau could buck the trend of the brick-and-mortar casino worldwide. While iGaming continues to extend its reach, with more and more jurisdictions opening to the idea of online sports betting and casino gaming, the physical floor is perhaps reaching something of a crossroads. Cities like Las Vegas continue to be dream destinations for high-rollers and casual gamblers alike but that can’t be said of everywhere. In countries like the UK, there has been a drop of nearly 10% in the number of physical venues compared to pre-COVID levels, according to Statista data. Any growth in the in-person industry should be celebrated then. It is an unprecedented success for any market that is largely losing ground to its online counterparts. Because of that, Macau could provide a reason to be cheerful in this new year.

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