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Macau's economy is based largely on tourism. Other chief economic activities in Macau are export-geared textile and garment manufacturing, banking and other financial services. The clothing industry has provided about three quarters of export earnings, and the gaming, tourism and hospitality industry is estimated to contribute more than 50% of Macau's GDP, and 70% of Macau government revenue.

Macau is a founding member of the WTO and has maintained sound economic and trade relations with more than 120 countries and regions, with European Union and Portuguese-speaking countries in particular; Macau is also a member of the IMF. The World Bank classifies Macau as a high income economy and the GDP per capita of the region in 2006 was US$28,436. After the Handover in 1999, there has been a rapid rise in the number of mainland visitors due to China's easing of travel restrictions. Together with the liberalization of Macau's gaming industry in 2001 that induces significant investment inflows, the average growth rate of the economy between 2001 and 2006 was approximately 13.1% annually.

In a World Tourism Organization report of international tourism for 2006, Macau ranked 21st in the number of tourists and 24th in terms of tourism receipts. From 9.1 million visitors in 2000, arrivals to Macau has grown to 18.7 million visitors in 2005 and 22 million visitors in 2006, with over 50% of the arrivals coming from mainland China and another 30% from Hong Kong. Macau is expected to receive between 24 and 25 million visitors in 2007.

Starting in 1962, the gambling industry had been operated under a government-issued monopoly license by Stanley Ho's Sociedade de Turismo e Diversões de Macau. The monopoly ended in 2002 and several casino owners from Las Vegas attempted to enter the market. With the opening of the Sands Macao, in 2004 and Wynn Macau in 2006, gambling revenues from Macau's casinos were greatly prosperous. In 2007, Venetian Macau, at the time the second (now fifth) largest building in the world by floor space, opened its doors to the public, followed by MGM Grand Macau. Numerous other hotel casinos, including Galaxy Cotai Megaresort, are also to be opened in the near future.

In 2002, the Macau government ended the monopoly system and six casino operating concessions and subconcessions are granted to Sociedade de Turismo e Diversões de Macau, Wynn Resorts, Las Vegas Sands, Galaxy Entertainment Group, the partnership of MGM Mirage and Pansy Ho (daughter of Stanley Ho), and the partnership of Melco and Publishing and Broadcasting Limited (PBL). Today, there are 16 casinos operated by the STDM, and they are still crucial in the casino industry in Macau, but in 2004, the opening of the Sands Macau ushered in the new era.

Macau is an offshore financial centre, a tax haven, and a free port with no foreign exchange control regimes. The Monetary Authority of Macau regulates offshore finance, while the Macau Trade and Investment Promotion Institute provides services for investment in Macau. In 2007, Moody's Investors Service upgraded Macau's foreign and local currency government issuer ratings to 'Aa3' from 'A1', citing its government's solid finances as a large net creditor. The rating agency also upgraded Macau's foreign currency bank deposit ceiling to 'Aa3' from 'A1'.

As prescribed by the Macau Basic Law, the government follows the principle of keeping expenditure within the limits of revenues in drawing up its budget, and strive to achieve a fiscal balance, avoid deficits and keep the budget commensurate with the growth rate of its gross domestic product. All the financial revenues of the Macau Special Administrative Region shall be managed and controlled by the Region itself and shall not be handed over to the Central People's Government. The Central People's Government shall not levy any taxes in the Macau Special Administrative Region.

Monetary system

In Macau, the unit of currency is the pataca which is currently pegged to the Hong Kong dollar at a rate of HK$1 = MOP1.03. The name pataca is a Portuguese word which was applied to the Mexican dollars that were the main circulating coin in the wider region in the second half of the 19th century. In the year 1894, the pataca was introduced in both Macau and Portuguese Timor as a unit of account for the Mexican dollar and the other silver dollar coins in circulation. In 1901 it was decided to grant the Banco Nacional Ultramarino the exclusive rights to issue banknotes denominated in patacas, and in the year 1906, these notes went into circulation at an official equivalent rate of 2 shillings and 4 pence sterling, and all foreign coins were outlawed. However, the Chinese were suspicious of these paper patacas, being so accustomed to using silver for barter, and as such, the paper patacas circulated at a discount in relation to the silver dollar coins. In the year 1935, when China and Hong Kong abandoned the silver standard, the Hong Kong dollar was pegged to sterling at the fixed rate of 1 shilling and 3 pence, whereas the pataca was pegged to the Portuguese escudo at a sterling equivalent rate of only 1 shilling. From 1945 to 1951 fractional coins of the pataca were minted for issue in Portuguese Timor, and in 1952 similar issues were minted for Macau including an actual pataca coin for the first time.

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