Animal Farm | Diversification into vanity

Albano Martins

Beauty products, make-up and skin care work their little miracles. Or to rephrase, when vanity helps this economy.
Exports of goods as a contribution to GDP exploded in 2020 (a year of very strong recession at 56.3%) and also in the second quarter of 2021.
Never in our economic life have we had so much to export (exports defined as sales to non-residents both outside and inside Macau). In the second quarter of 2021 alone, Macau exported the most on record, with the exception of 2004 and, of course, last year.
Why the diversification mantra? We already have it!
And the technique is simple, continue to kill the goose that lays the golden egg and give life to exports of goods, even if practically nothing is produced here, almost all of which are re-exports.
Of course, diversification is done with low blows, but what does it matter if what matters is the weight of the “non-gaming” variables in the entire GDP?
The public consultation document on gambling says: “… In 2019, the added value of the gaming sector was 50.86%, while that of the non-gaming sector reached around 50% (… ). Hence, it appears that the development of adequate diversification of the economy is showing preliminary positive results…”.
At least they could have used two percentages that added up to 100 percent, rounding them both off! But that would give “non-gaming” only 49%!
Just imagine when they become aware of the activity of exports of goods in 2020 and in the second quarter of 2021. They will conclude that diversification is already a reality!
In 2020, exports of goods were already 72.7 percent of gaming revenues, and had risen 129.3 percent! And in the second quarter of 2021 they were already 1.05 times greater than gaming revenues and had already reached 52 percent of the exports of services.
And then the famous personnel consumption (“consumption for the economy”)? It crashed at almost 16 percent!
But the miracle happened.
In the midst of the pandemic and restrictions on the entry and exit of visitors, even with the substantial reduction in visitors (-85%) and hotel occupancy (-72.5%), and with such a sharp drop in visitor expenses (-81.4%) and gaming (-79.33%), and a recession (-56.3%) the likes of which has never been seen in Macau’s history, the export of goods grew 129.3 percent.
It’s a miracle, gentlemen! Not even in periods of very strong GDP growth, and in gambling and visitors, has it grown so much.
This miracle was due to an assumption that no rational trader would hoard goods, so that in this way the only assumption remained that certain imported goods (beauty, makeup and skin care products) would have been all exported: The advantage of having vain people around who take care of themselves.
And the miracle was this, in this scenario of such a sharp fall in GDP, exports of goods in 2020 were more than three times higher than those of the External Merchandise Trade Statistics, which record what goes through customs, and 2.3 times higher than those from the year 2019!
Wouldn’t it be natural that in a period of such a deep and complicated crisis, goods would not readily be sold and that movements in stock would therefore increase? But no, in our case, stock dropped by 10.9 percent.
In 2020 China’s GDP growth was also affected by Covid-19, so that “in a rational market” purchases by non-Macau residents, who are mainly Chinese, were not expected to behave in the opposite way. I would even say that the correlation between these two variables is extraordinarily positive, as seen throughout the history of Macau’s economy.