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- GDP (PPP):
- $28.7 billion
- 26.4% growth
- $48,923 per capita
- Inflation (CPI):
- FDI Inflow:
Macau’s economic freedom score is 71.7, making its economy the 26th freest in the 2013 Index. Its overall score is essentially the same as last year, with gains in the control of public spending and corruption offset by declines in fiscal and monetary freedom. Macau is ranked 7th out of 41 countries in the Asia–Pacific region, and its overall score is well above the world and regional averages.
Flexibility and openness to global trade and investment have been the cornerstones of Macau’s dynamic economic expansion. As a Special Administrative Region of China, Macau largely maintains its own transparent, free-market economic structure. The overall entrepreneurial environment is generally adequate. Tax rates are competitively low, tariff and non-tariff barriers are nonexistent, and foreign investors can conduct business on the same terms as nationals. The rule of law is relatively well respected, though more effective anti-corruption measures are needed.
Macau has attracted significant investment since opening up its gaming industry in 2002. Ever-growing investment in resort and entertainment projects and related infrastructure has made Macau one of the world’s leading tourism destinations, with the services sector accounting for almost 90 percent of GDP and over 70 percent of total employment. The vibrant free port economy, however, needs more committed structural reforms to improve business and labor regulations and enhance prospects for more broad-based long-term economic development.
Macau became a Special Administrative Region of China in 1999. Like Hong Kong, 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 is pegged to the U.S. dollar.
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, but enforcement of intellectual property rights remains weak and inefficient. The government’s image has been damaged by corruption scandals and rising popular discontent linked to the perception that the growth of gambling has not benefited society more widely.
The top income tax rate is 12 percent, and the top corporate tax rate is 39 percent. Gambling tax revenues are quite high, and overall tax revenue is equal to 31.4 percent of GDP. Government spending is equivalent to 16.8 percent of total domestic output. Gambling revenue has outpaced the growth of public spending, generating considerable surpluses.
The overall regulatory environment lags behind similar economies in efficiency. 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 continuing lack of a dynamic and broad-based labor market is due in part to the absence of serious reform efforts. Monetary stability has been relatively well maintained.
The trade regime is open, with no tariffs imposed on imports and relatively low interference resulting from non-tariff barriers. The government does not officially discriminate between foreign and domestic investors, but there are a few restrictions in services markets. A relatively small financial sector, dominated by banking, provides easy access to financing. Capital markets remain underdeveloped.