Fitch Ratings Inc said in a Friday note on Macau, it expected the city’s economic diversification away from gaming “to remain slow” in pace. In the same memo, the ratings agency forecast Macau’s economy could enjoy a 48-percent jump in 2023, based on a “cautious assumption that gaming revenue will recover to about half of the 2019 level”.
In December, Fitch had suggested Macau’s economy could see in 2023 a 46 percent rebound. The city’s gross domestic product recorded a contraction of 26.8 percent in 2022.
In its Friday note, the ratings agency warned against “bottlenecks” impacting Macau’s aim to promote economic diversification. “Human capital constraints and skill gaps pose a key challenge for Macau to substantially reduce its high dependence on the gaming industry,” wrote analysts George Xu, Andrew Fennell and Jan Friederich.
Under their new 10-year concessions, that started on January this year, the Macau casino operators have collectively pledged to the government to spend in aggregate MOP108.7 billion (nearly US$13.6 billion) on non-gaming, and exploring overseas-customer markets.
Such spend might have to rise by up 20 percent collectively during the lifetime of the new concessions, if citywide annual gross gaming revenue (GGR) reaches MOP180 billion.
The Fitch team said it expected gaming recovery in Macau to be driven by the mass segment, “which accounted for three-quarters of total gaming revenue in 2022”. Junket operators would “remain sensitive to tight regulatory scrutiny” in both Macau and mainland China, it added.
The ratings agency noted that Macau was “well placed to capture strong pent-up demand from mainland tourists, given its status as the sole legal gaming tourism destination across Greater China and its geographic proximity to the mainland.” That was a reference to the lifting in early January for mainland China, Macau, and Hong Kong, of most Covid-19-related countermeasures, eventually leading to a surge in regional tourism.
March 18 saw nearly 100,000 visitors to Macau – the highest daily tally since the start of the pandemic in early 2020.
