IMF: Macau Recession to Last Through 2023, Prostitution Rings Threaten Family-Friendly Mission

Posted on: October 22, 2019, 08:41h.

Last updated on: October 22, 2019, 11:36h.

The Macau recession isn’t expected to end anytime soon. Analysts at the International Monetary Fund (IMF) forecasting economic growth say revenue will continue to decline through 2023.

The Macau recession has plenty of headwinds to weather before the enclave reaches more prosperous times. (Image: Bobby Yip/Reuters)

In the IMF’s October 2019 World Economic Outlook, titled “Global Manufacturing Downturn, Rising Trade Barriers,” analysts predict Macau’s real growth domestic product (GDP) and total domestic demand will slide 1.3 percent this year, and 1.1 percent in 2020.

The IMF believes Macau’s next year of GDP and domestic demand growth won’t come until 2024, when a 0.3 percent uptick is realized.

Home to 679,000 people, Macau officially entered a recession in August after the Chinese Special Administrative Region (SAR) experienced two consecutive quarters of GDP declines. “Given the incessant increase in external uncertainty, it is expected that the local economy will continue to experience recessionary pressure during the second half of this year,” Economy and Finance Secretary Lionel Leong explained.

The IMF said continued troubles in Macau’s gaming and tourism sectors, paired with an overall slowing in the Chinese economy, justified its rather dire outlook for the enclave.

We project a contraction for 2019, as game revenues are negatively affected by China’s slow growth. In addition, the uncertainty created by the end of gambling licenses in 2022 will have to be resolved for the investment to recover,” the IMF stated.

“Macau’s economy is highly exposed to the continent’s economic, financial, and political development,” the IMF concluded.

Market Adjustments

The world’s richest gaming hub was conceptualized with the high roller in mind. The issuing of commercial gaming licenses following Macau’s return to the People’s Republic brought five of the world’s largest casino giants to the region.

They invested heavily, building multibillion-dollar resorts on the main peninsula, and then creating the ultra-luxury Cotai Strip, where today’s VIPs play. But there are fewer of those coveted high rollers arriving in town than in previous years.

Mainland China began cracking down on VIP junket groups several years ago. That led to dozens of the trip organizers closing shop. The US-China trade war has slowed the People’s Republic economy, further leading to fewer high rollers venturing to Macau to gamble.

As a result, Macau’s six casino operators have directed more attention to the mass market.

Sex Sometimes Doesn’t Sell

Macau is undergoing sort of what Las Vegas did decades ago: shed its Sin City image in hopes of becoming a more family-friendly destination that appeals to the masses.

One thing hindering that goal is the enclave’s widespread sex industry. Individual prostitution is legal in Macau, but the law bans organizing sex rings and businesses.

An expose from the South China Morning Post this week reveals many alleged rings are doing business at some of the glitziest casino resorts. Undercover reporters said they had no problem finding prostitute brokers inside two Galaxy Macau nightclubs.

In one exchange, a mamasan explained that the price varied depending on the ‘quality of the girl.’ The less expensive women were referred to by the mamasan as ‘normal plates’ and the more expensive as ‘super models,'” the report detailed.

The SCMP believes the vast number of prostitutes in the region is hampering efforts to make Macau attractive for new, more family-oriented demographics.