Macau’s Chief Sees 2017 Economy Returning to Growth on Casinosby
Official sees GDP drop narrowing this year before rebounding
Government working with casino operators on non-gaming
Macau’s economy may reverse three years of contraction and return to growth in 2017 as its casinos industry led by units of Las Vegas Sands Corp. and Wynn Resorts Ltd. shift to attract recreational gamblers and tourists, according to the Chinese city’s top government official.
“Macau’s gaming industry and the whole economy will continue to adjust, but the decline may shrink to 7.2 percent this year and even resume growth in 2017,” Chief Executive Fernando Chui said in a televised session of the city’s legislature Wednesday. “It’s a good time for Macau to re-position after a 25-month gaming revenue drop.”
Gross domestic product in Macau declined 20.3 percent in 2015, worsening from the 0.9 percent drop the year before, as the world’s largest gambling hub was hurt by China’s anti-corruption campaign that scared off high-rollers. The casino industry, which accounts for half of Macau’s GDP, is in the midst of a casino building boom to boost revenue from mainstream gamblers and tourists.
Macau’s government is working with its six casino operators to “improve synergies” between gaming and non-gaming pursuits, Chui said. The city is trying to reduce its reliance on gambling and is targeting to raise the proportion of casinos’ non-gaming revenue to 9 percent by 2020 from 6.6 percent in 2014.
Casino receipts had fallen in June to the lowest level since September 2010, marking 25 consecutive months of declines. The International Monetary Fund forecast in April that the contraction in Macau’s economy will narrow this year, before growing 0.7 percent in 2017.
Some positive signs for Macau’s economy:
* Sands China Ltd. reported mass-market gaming revenue in the Chinese city rose in June for the first time in two years as billionaire Sheldon Adelson, the group chairman, said he’s optimistic recreational gamblers and tourists are spurring a recovery in Macau’s gaming industry
* In April and May, the city’s property sales transactions reached 2,123, the highest two-month period since 2013, and exceeded the 1,739 units sold in the same period in 2014 when prices hit their peak, according to data by Sniper Capital Ltd.
The opening of the $4.1 billion Wynn Palace and Sands’s $2.7 billion Parisian casino resorts over the next two months will provide opportunities for Macau’s gaming market to expand, with recreational gambling expected to grow in the low double-digit as gains in VIP gambling revenue remains modest, said Grant Govertsen, an analyst at Union Gaming Group LLC.
Gross gaming revenue growth will “finally turn positive by September,” helped by the new casinos, said Govertsen.