Macau: Corona hits the gambling city so hard
Countries and regions around the world have different strengths affected by the effects of the corona pandemic. Striking: Problems arise where gambling plays an important role. The reason is easy to find: The entire gambling industry stood still until a few days ago. As is well known, the industry plays a special role in the Chinese special zone Macau. Here the entire country is extremely dependent on the income of the casinos. And that didn't bode well for the past few weeks. In fact, the figures show that one can speak of an enormous imbalance. Apparently, the residents of Macau don't have to worry.
Gross domestic product dropped by almost half
In the last For months there have been reports that the economic situation in Macau has changed significantly. The casinos were no longer making reliable profits, and now the corona pandemic is also a factor. And that hits the special administrative zone particularly hard. Macau recently presented the sales figures for the gaming industry. And they are not particularly convincing. In May, the casinos took in a total of around 198.4 million euros. This is a very good increase compared to April.In comparison to the previous year, however, this sum means a minus of more than 93 percent. The casinos are now open again, but the values from last year are uncatchable.
This can also be seen in another place. Revenue for the whole of 2020 is currently around 3.7 billion euros. Compared to the previous year, this means a decrease of more than 73 percent. Problematic: A large part (around two thirds) of the income comes from January – and thus before the Corona break. However,January 2020 was more than 11 percent weaker compared to January of the previous year. So it's not just the Corona crisis.
Record decline with a sad climax in May
A look at the gross domestic product shows how massive the impact of the slump in the gaming industry is on the entire economy of Macau. Rund 60 Proeznt des BIP werden durch die Glücksspielbranche erwirtschaftet. And that's what has now caused GDP to fall nearly 49 percent (48.7 percent) in the first quarter of 2020. The collapse in tourism is primarily responsible for this. This means thatplayers and tourists from China are currently not able to enter. However, they are known to be the players with the highest turnover in Macau casinos.
As the US news serviceBloomberg reports, one could speak of a record decline with the current decline. And that, although nowdeclining income has already been recorded for the eighth time in a row. This also shows how hard Macau is currently being hit by the problems. Bloomberg says the recent slump underscores just how difficult it would be to recover from the February shutdown. The problem: The restrictions have now been relaxed, but only in stationary business. The travel restrictions still apply. Thelead the casinos to losses equivalent to around one million euros per day. However, health experts warn against reopening the borders too early in view of a second wave of infections.
Demand for more economic diversification
The fact that there are still certain dangers associated with contagion is probably another reason why there are currently no visitors in the casinos. Although the casinos have agreed to strict hygiene measures, hardly any visitors are currently pouring into the establishments. This again raises the question of whetherMacau is not too dependent on casino industry revenue. This is exactly what Prime Minister Ho Iat Seng has now criticized. He said it could take several years for the country's economy to recover from the damage. Seng therefore calls for much greater business diversity in the future. The focus should no longer just be on gambling, but also on other sources of income.
There is currently no real cause for concern, according to Seng. Instead, the gaming sector would help Macau have a stable economy for years to come.However, the economy must be sustainably developed and the "monotony of the infrastructure" must be broken for this, according to the head of government.
Bailout fund worth over a billion euros
To implement the plans, Seng is already aiming for steps in the coming months. A public consultation on casino licenses is to be launched later this year. Seng is likely to play into the cards that thelicenses of the largest gaming companies expire in June 2022. It seems possible that not all companies can hope for an extension of their license. As part of the "reform" of the economy, licenses should also become an issue. At the same time, according to Seng, the country's gambling law is also to be redesigned.
The head of government promised arescue package of around 1.2 billion euros for quick help from all residents, employees and corporations. Macau can easily afford that. The group has financial reserves of more than 55 billion euros. That would correspond to a reserve of around 90,000 euros per capita. One or the other crisis month could therefore still be survived well.