Slumping Macau Economy Set to Grow Again in 2017

After a boom in the early 2010s, Macau has seen its revenue decline for three straight years. But there’s hope for the world’s largest gambling destination because leading casinos like Wynn Macau and Sands Macao are now shifting their focus to recreational gamblers and tourists.

Fernando Chui, the Chief Executive in Macau, predicts that the Chinese territory will slow its decline in early 2017, before moving towards profitability by the end of the year.

“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,” Chui said. “It’s a good time for Macau to re-position after a 25-month gaming revenue drop.”

Bloomberg reports that Macau’s gross domestic product declined by 20.3% in 2015, which is 0.9% worse than 2014. The biggest culprit for this continued decline is China’s anti-corruption campaign, which has turned off VIP gamblers.

While China is busy cleaning up money laundering and other crimes in Macau, the unfortunate side effect is that Macau’s gambling industry – ing for half the city’s GDP – has taken a huge hit.

This is the primary reason why big Macau casinos are working to “improve synergies” between tourism and gambling pursuits. Chui says that the city wants to lower its reliance on gaming, while continually boosting non-gaming revenue.

June saw casino revenue fall to its lowest point since September 2010, prior to Macau’s boom. June 2016 marked the 25th consecutive month that Macau casino revenue has dropped.

The International Monetary Fund predicts that Macau’s economy contraction will slow by the end of this year, before growing by 0.7% in 2017.

Signs that point to growth again include: Sands China Ltd. reporting mass-marketing gambling revenue increasing for the first time in two years, and the city’s property sales rising to 2,123 in April and May – the highest two-month total since 2013.

Further encouragement is offered by the fact that the $4.1 billion Wynn Palace and $2.7 billion Sands Parisian will open within the next two months.

The Sands Parisian is particularly exciting because billionaire casino owner Sheldon Adelson announced a renewed commitment to recreational gamblers and tourism.

Grant Goversten, an analyst at Union Gaming Group LLC, believes that these casinos opening could boost recreational gambling by low double-digit amounts.

“[Gaming revenue will] finally turn positive by September,” said Govertsen.