Animal Farm | Pragmatism

Albano Martins

1. Macau will have to increase its efforts, and China must show greater openness, in order to reach 130 billion per year in gambling revenue in 2021, as predicted by the Government; something like 118.4 percent more than what was collected last year; something like a 40 percent increase on the December 2020 figure, to be replicated every month.
For this goal to be achieved, it would be necessary, on average, to reach gaming revenue of 10,833 million patacas a month!
This is the first time, as I recall, and I have been around for 40 years, the Macao Government is not being conservative in its predictions.
As a rule, a golden rule is followed when budgeting to avoid embarrassing deficits later.
The rule is to underestimate revenues and overestimate expenses, but without exaggeration.
Exaggeration was normal practice in Macau, especially after the transition, where come August, revenues collected would already exceed those expected to be collected by the Administration for the entire period under management.
Let’s recap the whole script unfold to April.
In January, revenue was only 8,024 million patacas.
In February, it stood at just 7,312 million patacas, once more below the crucial level of 10,833 million patacas.
In March, the figure was 8,303 million patacas!
In April, it was again below the threshold with 8,401 million patacas.
The mission has thus become much more difficult, though not impossible.
Everything depends on The Motherland.
Starting from May, gaming will need to produce 12,245 million patacas per month to reach the goal of 130 billion by the end of the year.
Is this possible?
Sure, but not as easily as it was in the past, especially after the new gambling regulations imposed by China regarding VIP gambling.
I believe that the Government had privileged information, or else it was led by Morgan Stanley’s forecasts, but fortunately it was much more restrained than the analyst.
Morgan Stanley reduced their initial forecast for 2021 by 10 percent, then fixed it at something like 184.9 billion patacas, or 206 percent more than 2020!
But by the end of April the cumulative growth in gaming revenue in Macau had been only 2.56 percent!
Not everything is black and white. The storm does not subside. The waves are large and there is no prospect of a safe haven.
Many people merely wait for a turnaround in gaming fortunes, without which the local economy will see no recovery, knowing that diversification is just a pipe dream and maybe there are no legs beyond the gaming industry.
Those who decide on these great policies are unreachable: they live way beyond reach at the top of the mountain.
And it has been proven that not one millimeter will be shifted to please any “second system”.
2. Deflation has already knocked at the door and entered, but few people want to recognize it.
It was recorded in March and is likely to continue for a few more months.
For those who do not believe it, the question remains, black and white, how much would the CPI (Consumer Price Index) have to grow so that in April we will not record deflation?
Well, you see, in absolute terms the CPI (General) would have to grow something like 4.1 points for inflation to be only 0.01%!
The possibility of this is miniscule.
Suffice to say that the biggest growth in CPI, above an absolute point, happened only in February 2016 and February 2018, alongside Chinese New Year!
The CPI grew by mere 1.03 and 1.04 absolute points in those two months!
Now, we are asking for something like 4.1 points of increase in absolute terms so that April does not continue in deflation.
My prediction is that we will have deflation again in April, probably somewhere between -0.32% and -0.35%, maybe -0.34%!
Anyway, -0.3% it will be, if one should use the hackneyed shortcut used by many people.

Categories Opinion