The International Monetary Fund (IMF) says “uncertainty” over the future of Macau’s gaming concession setup is hindering investment in the city. Those doubts, alongside a decline in exports of gaming services from Macau, were factors contributing to the decline in Macau’s gross domestic product (GDP) in the first two quarters of 2019, stated the body in a statement to Portuguese news agency Lusa.
The IMF mission chief for Macau, Mariana Colacelli, was quoted in the statement as saying that investors would need clarity regarding the city’s six gaming licences in order to regain confidence.
“The uncertainty created by the deadline of [the existing] gaming licences in 2022 will have to be resolved for investment [in the city] to recover,” said Ms Colacelli.
Several local gaming lawyers and scholars told GGRAsia earlier this month that Macau’s six casino business licensees have a good chance of having their local gaming rights refreshed beyond their upcoming expiry dates in 2022.
A new local government will be in post in the lead up to that process. Chief Executive-designate Ho Iat Seng takes office this December. The amendment of Macau’s gaming law framework would be one of the key tasks to be addressed by the new administration, said Mr Ho last month.
The IMF said in its latest World Economic Outlook report published last week that it expected Macau’s GDP to fall by 1.3 percent this year and by 1.1 percent in 2020.
That was in contrast with a forecast released earlier this year. In May, the IMF had forecast that the annual rate of growth in Macau’s GDP would be 4.3 percent this year and plateau around 4 percent in the medium term. The body said at the time that growth in the VIP gaming market in Macau would be subdued in the medium term.
Macau’s GDP fell by 1.8 percent year-on-year in real terms in the second quarter 2019, after declining by 3.2 percent in the first three months of the year, according to official data. The decline coincided with a slowdown in the city’s gaming industry.
The IMF’s Ms Colacelli said in her statement to Lusa: “We forecast a contraction for [Macau’s economy] in 2019 as gaming revenues are negatively affected by China’s [economic] slowdown.”
Real exports of gaming services from Macau – a measure of what visiting gamblers contribute to GDP – were down 0.8 percent in value in the second quarter of this year than a year earlier, according to official data. That was an acceleration from the 0.6 percent year-on-year decline recorded in the first quarter.
Casino gross gaming revenue (GGR) in Macau – a measure of casino industry performance – fell by 0.5 percent year-on-year in the three months to June 30. The aggregate casino GGR for the first nine months of 2019 stood at MOP220.30 billion (US$27.27 billion), a contraction of 1.7 percent year-on-year, showed official data.
But Ms Colacelli said there were also some “positive” developments, noting that new land reclamation projects in Macau could ease house prices and make growth sources less dependent on the city’s gaming industry, Lusa reported.
