Economic prosperity stable despite declining consumer confidence

The economic prosperity index in Macau is expected to remain stable between November 2024 and January 2025.

According to a report published by the Macau Economic Association (MEA), for the upcoming three months, index will stabilize at approximately 6.5 points.

This forecast aligns with trends observed over the past 10 months, during which the index has fluctuated between 6.0 and 6.6 points.

The MEA calculates the index, which ranges from 0 to 10 points, by evaluating 13 criteria, including the unemployment rate, visitor arrivals, and gross gaming revenue.

In its findings, the MEA noted that eight of the assessed indicators performed strongly. However, concerns remain regarding declining consumer confidence among mainland visitors and the lackluster stock performance of the six major casino operators.

Despite these issues, the association projected that local economy demonstrates resilience. This comes as M2 money supply reached 77.63 billion patacas in September, marking a year-on-year growth of 6.7 and a new monthly high.

Additionally, Macau recorded a record number of visitor arrivals during the recent National Day holiday, with hotel occupancy rates soaring to 94.5%
“Looking ahead, the MEA expects continued positive performance in visitor numbers, hotel occupancy, and the labor market,” the report read.

Recently, the Centre for Macau Studies and the Department of Economics of the University of Macau have adjusted their projections for the local economic outlook for this year downward after signs of cooling in mainland China.

The report notes that a key assumption has been reduced – visitors from the mainland are now expected to reach only 85% of record-breaking 2019 levels in the second half of the year.

Consequently, GDP growth was been revised to 12.1%, bringing GDP to MOP399.3 billion or 89.7% of 2019’s level. Alongside the GDP revisions, other forecasts have also been tweaked.

The revision comes after visitation slowed in the second quarter (Q2), with total arrivals down nearly 20% from early 2019’s pace.

Meanwhile, MEA’s report also highlights the potential benefits of recent global interest rate cuts, initiated by the US Federal Reserve’s decisions in September and November.

However, the association cautioned that the incoming U.S. administration, led by President-elect Donald Trump, might maintain existing tariff and trade policies, which could lead to increased inflation and mitigate the positive effects of the interest rate reductions.

“Against the backdrop of further intensification of global economic uncertainties, under the strong leadership [of the Central Government], the resilience and stability of Macau’s economy has gradually strengthened. It is expected that Macau’s economic outlook will remain around 6.5 out of 10 during the period from November this year to January next year, which is classified as stable,” the association’s report read.