Fitch ratings expects Macau GDP growth to slow this year
The ratings agency cited a slowdown in the Chinese economy and yuan depreciation.
Macau.- Fitch Ratings has forecast that the growth of Macau’s gross domestic product (GDP) will slow to 6.9 per cent this year, down from 8.8 per cent in 2024. Gross gaming revenue (GGR) is expected to rise more gradually to roughly 81 per cent of its 2019 level.
The ratings agency expects GDP growth to be supported by “continued, but slower, gaming tourism recovery” amid favourable visa policies for mainland visitors, non-gaming investments and enhanced tourism infrastructure. Analysts George Xu, Jeremy Zook and Jan Friederich warned that a slowdown in the Chinese economy as a result of US tariffs along with yuan depreciation could pose risks for Macau.
Analysts expect the mass-market segment to continue to drive GGR in 2025, prompted by visitation growth from mainland China. Analysts said: “We expect the stringent regulatory framework for junket operations and strict oversight of illegal cross-border gambling will continue to constrain the VIP segment recovery, which remains about 60 per cent below its pre-pandemic level.”
The ratings agency said diversification efforts faced “challenges”. Analysts said: “We expect Macau’s new chief executive will outline plans in an upcoming policy address to expedite diversification towards strategic non-gaming industries, forge closer collaboration with mainland partners to accelerate development of the Hengqin cooperation zone, and enhance social welfare with additional support to small businesses and individuals.
“However, human capital constraints and skill mismatches will remain key challenges to significantly reduce Macao’s heavy dependence on the gaming sector in the near term, and we expect Macao’s gaming dependence to persist.”
In December, during his visit to Macau to commemorate the 25th anniversary of the city’s return to China, president Xi Jinping stressed the importance of reducing Macau’s reliance on gaming as a primary economic driver and urged the city to continue diversifying its economy.
Analysts forecast that Macau’s budget surplus would rise to 4.2 per cent of GDP this year from an estimated 3.9 per cent in 2024. Fitch reaffirmed Macau’s long-term foreign-currency issuer default rating at AA with a stable outlook, highlighting “the territory’s exceptionally strong public and external finances, and its demonstrated prudent fiscal management even during periods of economic and gaming revenue shocks.”
