When a 26% plunge in GDP feels fine

WITH unemployment at 25%, government debt at more than 170% of GDP, and the country’s politics in turmoil, the 26% peak-to-trough decline in output brought about by the euro-zone crisis has been highly traumatic for Greece. Yet the government of Macau, the one-time Portuguese colony now the world’s gambling capital, just released figures showing that the territory’s GDP fell by 26.4% year-on-year in the second quarter. But at first blush Macau’s real economy appears to be doing rather fine. In spite of the steep fall in GDP, unemployment remained at its full employment level of 1.8%, private consumption grew and the territory’s government ran a budget surplus. Is the Macanese economy also about to run off a cliff?

 

It turns out that not all GDP is created equal. Macau, which in 2014 boasted GDP per head of $89,000, owes its prosperity to its casinos, which alone account for almost half of total output. The Chinese government’s anti-corruption campaign has caused gaming revenues to decline by 40% and other tourism revenues to fall by 21.5%. With gaming and tourism accounting for such a large share of total...Continue reading

Source :Business and finance http://ift.tt/1KChniT