Fitch forecasts GDP growth will slow to 6.9% in 2025, down from 8.8% in 2024, as gross gaming revenue (GGR) grows more slowly, reaching around 81% of its pre-pandemic levels.
Despite a strong rebound in 2024, with gaming revenue rising by 23.8%, growth in the sector is expected to moderate in 2025.
As Macau enjoys strong public finances and a solid external position, the region continues to grapple with challenges stemming from its dependence on the gaming sector.
Fitch Ratings has maintained Macau’s credit rating due to the territory’s exceptional public finances and fiscal management, which have demonstrated resilience even during periods of economic strain. A key strength is the region’s substantial fiscal reserves, which remain free from government debt.
By the end of 2024, fiscal reserves were up 6.2% year-on-year, reaching MOP616 billion. This financial cushion provides the territory with a significant buffer against external volatility.
According to the report issued by Fitch yesterday, the agency noted that Macau’s external financial position is similarly strong, with a projected current account surplus of 33.9% of GDP in 2025, driven by services exports from the gaming and tourism sectors.
This surplus reflects the city’s role as a key player in the global gaming market.
However, the economy remains highly dependent on gaming, which limits its diversification.
The territory’s foreign exchange reserves stood at USD30 billion in January 2025, covering about 4.5 times its monetary base.
Meanwhile, visitor arrivals showed significant growth in early 2024, with 8.88 million visitors in the first quarter, a 79.4% year-on-year increase.
However, growth began to taper in subsequent quarters, with third-quarter visitor arrivals totaling 9.2 million, marking only an 11.1% year-on-year rise. Mainland China accounted for the majority of visitors (6.68 million), while arrivals from Hong Kong declined by 6%.
The mass-market gaming segment, driven by tourism from mainland China, is expected to continue recovering, though the VIP segment remains well below pre-pandemic levels due to tighter regulations.
The government is focused on diversifying its economy, with plans to expedite non-gaming industries and deepen integration with mainland China. Efforts to develop the Hengqin cooperation zone and ease visa restrictions are part of this strategy.
However, significant challenges remain in reducing the territory’s reliance on gaming, particularly due to human capital constraints.
On the fiscal front, Macau is expected to continue running a budget surplus, forecasted to rise modestly to 4.2% of GDP in 2025.
The government’s spending restraint, combined with strong revenue collection, should help support social welfare and infrastructure development.
While Macau’s financial position is strong, vulnerabilities exist, as a sharp slowdown in mainland China’s economy or significant policy changes could negatively impact the territory’s growth prospects.
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