Fitch Ratings Inc expects Macau to report “solid economic expansion” in 2024 and 2025, “albeit at a more moderate pace” than previously seen. The institution forecasts the city’s gross domestic product (GDP) to grow by “15 percent” year-on-year this year, followed by 8 percent expansion next year, according to a Tuesday report.
“This will be supported by the ongoing revival in the gaming tourism sector, expanded handling capacity and favourable policy initiatives,” wrote analysts George Xu and Jeremy Zook.
They noted that new visa rules introduced in the second quarter this year by the mainland authorities “allow eligible mainland travellers to make multiple trips on group tours between Macau and Hengqin”.
“Mainland residents holding a business visa can now stay for up to 14 days, doubling the previous seven-day limit,” they added.
Additionally, eight more mainland cities were added in May to the list of places where people can apply for Individual Visit Scheme (IVS) exit visas to travel to Macau and Hong Kong. It took the number of IVS-eligible places to 59, from 51 previously.
Macau’s GDP grew by 15.7 percent year-on-year in real terms in the first half of 2024, according to data from the city’s Statistics and Census Service.
Macau’s gross gaming revenue (GGR) for the first nine months of 2024 rose by 31.3 percent year-on-year, to MOP169.36 billion (US$21.16 billion currently), according to official data.
The GGR tally for the year to September 30 was a “return to 77 percent of the pre-pandemic level,” observed Fitch.
“The territory recorded robust tourist inflows during the week-long National Day holidays [in October], with average daily arrivals exceeding… the same period in 2019,” added the ratings agency.
The institution also said that stimulus measures recently announced by China’s central authorities “will most likely help to boost gaming revenue and consumer confidence”.
Fitch affirmed earlier this year Macau’s long-term foreign-currency issuer default rating (IDR) at ‘AA’, with a “stable” outlook.
“Macau’s ratings primarily reflect the territory’s exceptionally strong public and external finances, and demonstrated fiscal prudence even during periods of economic and gaming revenue shocks,” said the Fitch analysts in Tuesday’s memo.
Fitch also said Macau maintains substantial fiscal buffers.
“Strong year-to-date gaming tax revenue aligns with our projection that the budget will revert to a surplus of 3.8 percent in 2024,” stated the analysts.
“Fiscal reserves rebounded from MOP558 billion at end-2022 to exceed MOP600 billion at end of first-half 2024, equivalent to 6.5 times of our projected [estimate of] expenditure,” they added.
While underlining the importance of the Macau government’s policy to diversify the city’s economy beyond gaming, Fitch said that “human capital constraints and skill mismatches” would “remain a key challenge” in the bid to reduce the “territory’s overwhelming dependence on the gaming sector in the near term”.
