Macau’s economy is likely to “contract by 2.5 percent” in 2019 and see no real growth next year due to sustained softness in the city’s gaming industry, suggested Fitch Ratings Inc in its latest report on Macau’s economic performance.
In a Monday statement, the ratings agency said it had revised the outlook on Macau to “negative” from “stable”. Despite “strong public and external finances” and fiscal prudence in times of economic downturns, Macau’s “ratings are constrained by … high gross domestic product (GDP) volatility and narrow economic base, which largely consists of gaming tourism from mainland China,” said Fitch.
“Fitch forecasts the economy to contract by 2.5 percent in 2019, largely a by-product of the downturn in the gaming sector. The completion of several major infrastructure projects last year also implied weak investment and construction activity during 2019,” stated the institution.
Macau’s economy shrank by 3.5 percent year-on-year in real terms in the first three quarters of 2019, according to official data released last month. The factors that contributed to the economic contraction include a 22.1-percent drop in investment and decline in exports of services, with exports of gaming services declining by 2.0 percent.
Fitch said that a slower growth in mainland China “has had a dampening effect on Macau’s gaming sector” in 2019. Casino gross gaming revenue (GGR) in Macau was down 2.4 percent year-on-year in the 11 months to November 30, according to official data.
Fitch said it anticipated Macau’s “subdued economic activity” to continue into next year, “with forecasted real GDP growth of 0 percent”. The forecast is based on the rating house’s assumption that Macau gaming revenues will likely “grow in the low single-digits” in 2020.
Macau’s economic growth outlook is only “indirectly affected” by any further escalations in U.S.-China trade tensions, the ratings agency noted.
“The agency does not believe it is likely that the Macau operations of U.S. casino operators will be enveloped in ongoing U.S.-China trade tensions, given the potential ramifications this could have on local employment and the territory’s [Macau's] social stability,” Fitch wrote.
“Macau’s growth outlook could be indirectly affected by further escalation in U.S.-China tensions insofar as this results in downward revisions to our projections for economic growth on the mainland,” the institution added.
May 14, 2021Casino equipment provider Scientific Games Corp has appointed Trevor Ross (pictured) as its new sales director for Asia. Mr Ross assumed the new role in May 2021, after serving as...
”While we recognise we have more work to do, we welcome ILGA’s indication today that Crown’s reform implementation is well-advanced towards suitability to operate gaming at Crown Sydney”
Executive chairman of Australian casino operator Crown Resorts