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- GDP (PPP):
- $43.6 billion
- 9.9% growth
- $78,275 per capita
- Inflation (CPI):
- FDI Inflow:
Macau’s economic freedom score is 71.3, making its economy the 29th freest in the 2014 Index. Its overall score is 0.4 point lower than last year due to declines in fiscal freedom, monetary freedom, and freedom from corruption. Macau is ranked 7th out of 42 countries in the Asia–Pacific region, and its overall score is well above the world and regional averages.
Macau’s economic freedom was first graded in the 2009 Index, and its progress in implementing more targeted reforms to advance economic freedom has been stagnant at best. Modest declines in half of the 10 economic freedoms, including freedom from corruption, government spending, and labor freedom, have resulted in a six-year combined score loss of less than 1 point. Only investment freedom has advanced, further enhancing market openness.
Macau’s economy has been rated “mostly free” throughout its history in the Index. The free port city has long benefited from global trade and investment. The entrepreneurial environment is generally efficient and streamlined, and property rights are relatively well respected. The services sector accounts for almost 90 percent of GDP and over 70 percent of total employment. Investment in resort and entertainment projects and related infrastructure has transformed Macau’s small economy into one of the world’s leading tourism destinations.
Macau became a Special Administrative Region of China in 1999, but it retains much of its historic political governance structure and economic system. Its chief executive is appointed by Beijing. Gambling revenues reportedly amounted to $23.5 billion in 2010, and direct taxes on gambling account for well over half of all government revenue. Manufacturing of textiles and garments, once the mainstay of the economy, has largely migrated to the mainland. Macau’s currency enjoys full convertibility with the Hong Kong dollar, which in turn is pegged to the U.S. dollar.
In 2013, China pressed Macau to step up efforts against money laundering in casinos and adopt other anti-corruption measures. Macau has its own judicial system with a high court; the legal framework is based largely on Portuguese law. Property rights and commercial contracts are secure. In 2012, the Legislative Assembly strengthened the copyright law by extending protections to Internet and digital technology.
The top individual income tax rate is 12 percent, and the top corporate tax rate is 39 percent. Taxes on gaming and gambling constitute a large portion of overall tax revenue, which is equal to 34.5 percent of gross domestic income. Budget surpluses have been the norm in recent years. Public expenditures are 16.6 percent of gross domestic income. There is no public debt.
License requirements vary by type of economic activity, but general business activities such as retail, wholesale, and business consultancies do not require a license. The lack of a broad-based labor market is due in part to the absence of serious reform. Monetary stability is relatively well maintained, but the government funds numerous subsidies such as those for pension benefits, public housing, and international convention tourism.
Macao has a 0 percent average tariff rate and few non-tariff barriers. There are few restrictions on foreign investment. The small financial system, dominated by banks, functions without undue government influence. Credit is allocated on market terms, and relatively sound regulation and supervision assure free flows of financial resources. Easy access to financing is available for private-sector activity.