Moody’s Investors Service has maintained the outlook on the Macau Special Administrative Region (SAR) government as ‘negative’, while keeping the region’s foreign currency issuer ratings at “Aa3”, indicating a very low credit risk of default.
The Tuesday announcement follows Moody’s decision to affirm China’s ‘A1’ rating and maintain the negative outlook.
“The affirmation of the Aa3 rating for Macau reflects our assessment that the SAR retains formidable credit strengths, including very high per capita income and the absence of outstanding government debt,” stated the ratings agency.
“Moreover, its large fiscal and external reserves provide the economy with very strong buffers to absorb shocks and negative long-term trends including a structural slowdown in China’s economy,” it added.
The institution said however that the negative outlook on Macau’s rating reflected its “assessment of tight economic, political and institutional linkages between Macau and the mainland, which keep the rating gap between the SAR and [mainland] China no wider than one notch”.
“In particular, Macau’s large tourism and gaming sectors are highly dependent on demand from China,” stated the institution. “In turn, tax revenues from the gaming sector account for the majority of the SAR’s total government revenue,” it added.
Despite its credit strengths, “there are risks that Macau’s currently very large fiscal and external buffers may erode over time, should Macau’s growth prospects weaken,” warned Moody’s.
The institution said: “In particular, weaker economic activity in the gaming sector would lower government revenue and services exports, undermining fiscal and current account surpluses in the absence of mitigants such as expenditure restraint or a material diversification of the SAR’s economic structure.”
Macau’s first-quarter gross domestic product (GDP) contracted by 1.3 percent year-on-year in real terms, according to official data published this month. Such decline was due “a relatively high comparison base in the same quarter last year, changes in visitor consumption patterns and other factors,” said the city’s Statistics and Census Bureau.
The overall economic output in the first three months of 2025 “corresponded to 85.2 percent of the level in the same period of 2019,” it added.
Exports of gaming services in January to March this year rose by 1.6 percent from a year ago, while exports of other tourism services fell by 11.7 percent.
Gaming and tourism services in Macau are included in exports when calculating the city’s GDP in order to reflect spending by tourists in the city’s casinos and other tourism-focused businesses.
The Macau government collected just under MOP29.84 billion (US$3.71 billion) in fiscal revenue from gaming in the first four months of 2025, flat compared to the prior-year period, showed data released by the city’s Financial Services Bureau.
Macau’s leader, Chief Executive Sam Hou Fai, stated in the government’s Policy Address for Fiscal Year 2025, outlined in mid-April, that the public budget might need to be revised for a number of reasons, including the GGR outlook for the year, and some spending commitments still to be factored.
Brokerage CLSA Ltd observed in a recent report that Macau gross gaming revenue (GGR) per capita among the city’s visitors has been declining year-on-year in 2025, and remains far from being able to support the local government’s 2025 revenue target for the city’s casino industry.
The International Monetary Fund (IMF) halved its forecast for Macau’s economic growth in 2025, according to its World Economic Outlook report published in April. The institution now expects Macau’s GDP to expand by 3.6 percent this year, down from a previous estimate of 7.3 percent made in October.
