SNAPSHOT2 min read

What casino revenues can tell us about Chinese economic growth

Macau is the only place in China where casino gambling is legal. The spending data, therefore, offers an alternative view of moves in the Chinese economy.

18/12/2018
macau

Authors

Emma Stevenson
Equities Correspondent

China and other Asian economies have been under pressure recently from trade tensions and softer technology demand. The slowdown in China is reflected by weaker Macau casino receipts, as shown in the chart below.

Macau-casino-revenues-and-China-GDP

Macau casino revenues are considered to be a good indicator of consumer income and activity. Macau is the only place in China where casino gambling is legal. The casinos report their revenues on a monthly basis and the data is perceived as reliable. Since the official GDP data from China is viewed with a degree of scepticism, casino receipts can be better at capturing changes in the business cycle.

However, the recent slowdown in casino revenues hasn’t shifted immediate growth forecasts. The Schroders Economics Team had already lowered its 2019 growth expectations for China in August. Emerging Markets Economist Craig Botham explains that this was “to incorporate a full-scale escalation of the US-China trade war.”

He adds “We have, however, altered our expectations around the currency; we now expect a larger depreciation of the renminbi versus the dollar, even in an environment of broader dollar weakness. Combined with expectations on oil and food prices, this leads us to revise our inflation expectations higher for 2019, to 2.6% from 2.4% previously.”

The team forecasts Chinese economic growth at 6.6% for 2018, slowing to 6.2% in 2019 and 6.0% in 2020. Global GDP growth is forecast to slow to 2.9% in 2019 and 2.5% in 2020. This compares to an expectation for 2018 growth to be 3.3%.

For more on the economic picture for 2019, please see Outlook 2019: Global economy

Issued in the Channel Islands by Cazenove Capital which is part of the Schroders Group and is a trading name of Schroders (C.I.) Limited, licensed and regulated by the Guernsey Financial Services Commission for banking and investment business; and regulated by the Jersey Financial Services Commission. Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements. All data contained within this document is sourced from Cazenove Capital unless otherwise stated.

 

Authors

Emma Stevenson
Equities Correspondent

Topics

China
Economics
Economic views
Snapshot
Emerging Markets

Cazenove Capital is a trading name of Schroders (C.I.) Ltd which is licensed under the Banking Supervision (Bailiwick of Guernsey) Law 2020 and the Protection of Investors (Bailiwick of Guernsey) Law 2020, as amended in the conduct of banking and investment business. Registered address at Regency Court, Glategny Esplanade, St. Peter Port, Guernsey GY1 3UF, (No.24546) . Schroders (C.I.) Limited, Jersey Branch is regulated by the Jersey Financial Services Commission in the conduct of investment business. Registered address at 40 Esplanade, St. Helier, Jersey JE2 3QB, (No.31076).

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