Macau Feels the Pinch of China's Slowdown

Macau’s casino business is showing signs of fatigue. The former Portuguese colony, the only place in China with legalized casino betting, is the world’s top gambling hub, with $34 billion in gaming revenue last year. Thanks to Chinese tourists flocking to the Special Administrative Region, Macau has enjoyed torrid growth—gross domestic product increased by 21 percent last year—and a jobless rate of just 2 percent. Revenue growth for the casinos was even better, climbing 42 percent in 2011.

Even Macau, though, isn’t immune to the latest turmoil in the global economy. On June 2, its government announced that casino revenue was $3.3 billion in May, an increase of 7.3 percent compared with a year earlier. That pales next to the 27 percent growth the casinos enjoyed in the first quarter over the year before. It’s the slowest rate of growth since the depths of the post-Lehman financial crisis and comes at a time when China’s economy is losing momentum. The Chinese government has set a GDP growth target of 7.5 percent this year, the lowest in eight years, as China’s export machine feels the impact of Europe’s debt problems.