Macau's economy is now based primarily on tourism, specifically casino gambling. The global financial crisis, combined with restrictions imposed by the Peopleís Republic of China that limited Chinese visitors to Macau, caused Macau to experience its first economic contraction since the gaming sector was opened to foreign investment in 2002. However, accelerating Chinese economic growth and relaxation of Chinese exit visa restrictions boosted Macauís growth back into positive territory in the third quarter of 2009. Textile and garment manufacturing, once mainstays of the Macau economy, have virtually vanished and efforts to diversify the economy have had limited success. Through the first 10 months of 2009, Macauís exports dropped by more than 50%, with exports to the U.S. falling by 80%. Macau is heavily dependent on imports of all kinds, and although imports have dropped by 20%, the trade deficit through the first 10 months of 2009 increased to U.S. $2.9 billion. Gaming alone contributed almost 70% of GDP through the first three quarters of 2009. The opening of the formerly monopolized gambling sector in 2002 has led to significant new investment in casinos, hotels, and related facilities. In the first 10 months of 2009, tourist arrivals fell by 7.1% from the same period in 2008, though visitors appear to be coming to Macau in increasing numbers once again. Mainland Chinese tourists accounted for just over 50% of all tourist arrivals to Macau, with Hong Kong tourists accounting for 32% and Taiwan visitors about 6%.
Macau depends on mainland China for most of its food, fresh water, and energy imports. The European Union and Hong Kong are the main suppliers of raw materials and capital goods.
In the last few years virtually all of Macau's manufacturing operations (mainly textiles and garments) have moved across the border to mainland China. Mainland competition, along with the 2005 end of Multi-Fiber Arrangement (MFA) quotas, which had provided a near guarantee of export markets, have meant the end of Macau's low-end mass production of textiles. While still accounting for almost 30% of Macauís total exports, textile and clothing exports amounted to less than U.S. $1 million in the first 10 months of 2009. For future growth, Macau is betting heavily on becoming a regional center for gaming, tourism, conventions, and corporate incentive travel; foreign and local investors have massively expanded the casino, hotel, and restaurant sectors. U.S. investment has played a leading role in the development of Macauís gaming and entertainment sector. According to Macau Government statistics, U.S. direct investment in Macau totaled U.S. $2.2 billion at the end of 2008, making the U.S. Macauís second-largest source of foreign direct investment after Hong Kong (U.S. $4.0 billion). Direct investment in Macau from mainland China (U.S. $1.2 billion) has been concentrated in the financial sector.
Information by U.S. Department of State
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