Regional and global uncertainty and the impacts on the tourism and gambling industry of Macao

For decades, gambling has been Macao’s pillar industry. In 2023, the gambling sector accounted for 38.3% of Macao’s total economic output, highlighting its fundamental role in the city’s economy. In this study, we employ vector autoregression to examine the impact of regional and global uncertainty on Macao’s gambling industry. Our results indicate that both regional and global uncertainties negatively affect Macao’s gaming revenue, with gloabl uncertainty exerting a greater influence in the variance decomposition. However, the gambling industry remains highly resilient, as uncertainty—both regional and global—only accounts for approximately 16.7% of the variance decomposition of gaming revenue. Policymakers should consider this relative insensitivity when formulating economic policies in an increasingly uncertain global landscape and when pursuing economic diversification strategies. This paper also suggests that maintaining tourism and gambling as Macao’s pillar industry could help the city navigate economic and political uncertainty until a more resilient sector is identified.