The International Monetary Fund (IMF) expects Macau’s economy to continue to expand in coming years, after an estimated 17-percent growth in 2021, “helped by the partial recovery of the gaming sector”. But, it warned, “it will take time before the economy returns to its pre-crisis level.”
The fund issued a written statement on Sunday that offered the prediction in the light of discussions last week between IMF officials and Macau officials.
Macau’s gross domestic product (GDP) is projected to grow by 15 percent in 2022, “driven by the gradual return of foreign tourists and the recovery of domestic demand,” said the IMF.
It added: “Boosted by increasing investment linked to the issuance of new gaming concessions and further integration with the Guangdong‑Hong Kong‑Macao Greater Bay Area, growth is expected to accelerate to 23 percent in 2023 before gradually converging to its long‑term potential of around 3.5 percent over the medium term.”
Macau is currently revising its gaming law framework, as a linked issue to a fresh public tender process for Macau gaming rights associated with the expiry of the current permits in June this year. Members of Macau’s Legislative Assembly approved on Monday the first reading of the government-backed bill.
The IMF said the amended proposal to reform Macau’s gaming law “has addressed a number of investor concerns, but some uncertainty remains.” It noted that the tightening of rules on junkets’ operations – and their marketing services in mainland China – “poses risks to the outlook of the VIP segment of the market.”
The retreat of the junket sector in Macau has coincided with several unanticipated events in the market. They included the closure of all Suncity Group VIP rooms in the city, after the brand’s founder Alvin Chau Cheok Wa was detained on November 27 on suspicion of organising illegal gambling for Chinese customers, including online gambling via the Philippines.
In its assessment of Macau’s macroeconomic situation, the IMF stated that “given the depth of the economic losses” during the Covid-19 pandemic, the level of Macau’s GDP “is expected to surpass its pre-crisis level only in 2025″.
Although the strong fiscal support from the Macau government and the financial strength of the city’s casino operators “cushioned employment and consumption, the sharp decline in activity” exposed Macau’s “vulnerabilities to external forces affecting the inflow of tourists,” said the IMF.
The institution highlighted some short-term risks to its outlook for Macau, including a “re-intensification of the pandemic” and an increase in the city’s “financial sector stress”.
In its report, the IMF said the strength of Macau’s recovery “hinges on a safe reopening” to tourists. The opening of travel corridors between Macau and “other economies with high inoculation and low infection rates could accelerate the recovery of the gaming sector,” said the fund.
Mainland China remains the only place to have a largely-quarantine free travel arrangement with Macau.
