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- GDP (PPP):
- $80.8 billion
- -0.4% growth
- 13.7% 5-year compound annual growth
- $139,220 per capita
- Inflation (CPI):
- FDI Inflow:
Macau has attracted significant investment since opening up its gaming industry in 2002. Ever-growing investment in resort and entertainment projects and related infrastructure has made Macau one of the world’s leading tourism destinations, with services accounting for almost 90 percent of GDP and over 70 percent of total employment.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: 70.1 (down 0.2 point)
- Economic Freedom Status: Mostly Free
- Global Ranking: 37th
- Regional Ranking: 9th in the Asia–Pacific Region
- Notable Successes: Trade Freedom and Investment Freedom
- Concerns: Corruption and Labor Freedom
- Overall Score Change Since 2012: –1.7
Macau, colonized by the Portuguese in the 16th century, became a Special Administrative Region of China in 1999, and its chief executive is appointed by Beijing. Under China’s “one country, two systems” policy, Macau enjoys a high degree of autonomy except in matters of national defense and foreign policy. Macau is one of the world’s largest gaming centers and the only place in China where casinos are legal. Gaming-related taxes account for approximately 80 percent of government revenue. During 2014, Macau’s economy was negatively affected by China’s anti-corruption campaign and the mainland’s economic slowdown. Gaming revenues are down around 40 percent from the previous year. Two ongoing structural problems are a lack of tourist attractions for non-gamblers and high travel expenses.
The mainland Chinese government’s anti-graft campaign has led to a sharp decline in gambling revenue in Macau that has caused a sharp contraction in the economy. Macau has its own judicial system with a high court; the legal framework is based largely on Portuguese law. Private ownership of property and contractual rights are well established. There are no restrictions on foreign property ownership.
The top personal income tax rate is 12 percent, and the top corporate tax rate is 39 percent. Gambling tax revenues are quite high, and overall tax revenue equals 32 percent of GDP. Government spending is equivalent to 14.3 percent of total domestic output. Gambling revenue has outpaced the growth of public spending, generating considerable surpluses.
The overall regulatory environment is less efficient than those of similar economies. License requirements vary by type of economic activity. The lack of a dynamic, broad-based labor market is caused partly by the absence of serious reform efforts. Monetary stability has been relatively well maintained, but government subsidies to households increased by nearly 50 percent in the first half of 2015 despite a severe economic downturn.
Macau has an average tariff rate of 0 percent. Non-tariff barriers are low and do not interfere significantly with trade. Most sectors of the economy are open to foreign investment. Foreign and domestic investors are generally treated equally under the law. The relatively small financial sector is dominated by banking and provides easy access to financing. Capital markets remain underdeveloped.