The Economist Intelligence Unit (EIU) says in its latest report on the outlook for Macau that “the continued growth” in the local gaming sector and in spending from more affluent mainland Chinese tourists supports its forecast for a nearly 6 percent economic growth in 2018.
“Activity in Macau’s gambling sector has continued to underpin the territory’s robust economic growth,” said the research unit. “We expect the economy to record 5.8 percent annual growth in 2018, based primarily on the strong performance of that sector.”
It added: “However, this will cause officials to de-prioritise efforts to diversify Macau’s economy in the short term, which is a long-term policy goal of the current administration.”
The growth rate of Macau’s economy however is expected to slow to 3.9 percent next year, according to EIU’s forecast.
The document said that the Macau government’s efforts to diversify the city’s economic structure are expected to “remain unsuccessful”. But the research house said that the city’s gaming operators should continue to expand their non-gaming offerings in order to increase the existing entertainment opportunities.
Although mainland China’s economic growth is expected to slow slightly in the 2018-2019 period, the EIU expects the average income of the population to continue to rise, allowing Chinese visitors to Macau to spend more in gaming and entertainment.
A slowing Chinese economy could be a potential hindrance to short-term growth in gross gaming revenue (GGR) for Macau’s casinos, said brokerage Sanford C. Bernstein and Co LLC in a report released last month.
The Macau market’s casino GGR tally for the first eight months of 2018 stood at MOP202.10 billion (US$25.1 billion), up 17.5 percent from the prior-year period.
For the first half of 2018, Macau’s economy grew by 7.6 percent year-on-year in real terms, according to data from the city’s Statistics and Census Service.
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Analyst at Roth Capital Partners