Macau real GDP to grow 10% in 2024, analysts say

The rating agency S&P Global Ratings attributes this growth to the normalization of gaming activities and a surge in visitor numbers.

Macau.- S&P Global Ratings has predicted that Macau’s real gross domestic product (GDP) will rebound strongly by approximately 78 per cent in 2023, with another 10 per cent growth expected in 2024, following a contraction of 21 per cent in 2022. 

This projection was based on the expected surge in visitors and normalization of gaming activities once the travel restrictions related to the pandemic were lifted, which should continue to support Macau’s economic recovery.

However, S&P noted that Macau’s economy heavily relies on gaming and tourism, which constrains its economic resilience. According to analysts, the concentration of business in these sectors exposes the economy to high swings, as reflected in Macau’s performance throughout the Covid-19 pandemic. 

The agency also stressed that the high concentration in the gaming industry has put pressure on the banking industry. Macau’s high proportion of cyclical industries such as gaming and tourism, and the volatility of property prices, expose banks to the risk of rapid rise in credit losses during an economic downturn.

Furthermore, the research team considered the high per capita GDP (approximately US$63,500 in 2023) overstated the strength of the economy. Although Macau is one of the richest regions in the world in terms of per capita GDP, the high concentration of the gaming industry, along with income inequality, limits the economic resilience of the region, analysts said. 

The government is expected to continue diversifying the economy towards non-gaming sectors, but analysts pointed out this will likely take time.

See also: Macau expects non-gaming to make up 60% of GDP by 2028

Macau’s GDP has a high correlation with the gross gaming revenue (GGR). For 2023 as a whole, Macau’s GGR was MOP183.06bn (US$22.75bn). That’s a rise of 333.8 per cent when compared to 2022.

As Macau’s annual GGR exceeded MOP180bn (US$22.45bn), the six city’s casino operators are to increase their pledged non-gaming investment by 20 per cent. 

This is due to the new 10-year concession contracts signed between casino operators and government from January 2023. The increase in spending will have to be maintained for the period between 2023 and 2032. 

Morgan Stanley predicted that Macau’s GGR will rise 28 per cent year-on-year in 2024 and reach 80 per cent of pre-pandemic levels.