Economists see ‘stable’ trend from June to August, warn of underlying concerns

The average daily number of visitors to Macau over the past two months has remained steady at about 100,000, leading to higher local hotel occupancy rates.

However, multiple indicators have revealed underlying concerns, with the Macau Economic Association expecting the economic outlook to remain “stable” through August.

The association released its latest Macau Economic Sentiment Index on Sunday, indicating an overall “stable” level for April and May, with index scores of 5.9 and 6.2, respectively.

The group attributes this cautiously optimistic economic outlook for the city to several factors, including “overheated” or “extremely overheated” hotel occupancy rates and related indicators, the maintenance of the money supply (M2) at MOP80 billion in April, and average daily gross gaming revenue (GGR) in April and May meeting market expectations at MOP629 million and MOP684 million, respectively.

However, the group warned in its statement that while some indicators may appear stable, underlying concerns could pose risks to the economic outlook.

These include persistently low consumer confidence in mainland China, sluggish share prices for the city’s six integrated resort operators, cautious market sentiment regarding consumption and investment, a low loan-to-deposit ratio among local residents in the banking sector, and an overall residential property price index that remains at a three-year low.

“The overall non-performing loan ratio and total amount in Macau have declined for three consecutive months, indicating a positive trend. However, local residents’ non-performing loans remain high, showing no significant improvement. The residential property price index fell to 203.6 points in April, a three-year low, highlighting ongoing weakness in the real estate market,” the statement read.

“Additionally, the loan-to-deposit ratio for local residents at Macau banks has dropped to 50.9%, the lowest in nearly a decade, reflecting insufficient consumer spending intentions and high savings compared to credit demand, which hampers economic momentum,” it added.

The association also anticipates that with several satellite casinos set to cease operations by the end of the year, recent indicators – such as unemployment rates and employment figures –suggest that employment pressures may be rising slightly, indicating subtle changes in the labor market.

“The economic sentiment index for Macau is expected to remain around 5.9 points from June to August this year. While overall sentiment remains stable, several indicators highlight underlying concerns that should not be overlooked,” it added.

Regarding the global economy, the association noted that nearly 70% of economies have lowered their growth expectations due to the ongoing downturn.

Both the International Monetary Fund (IMF) and the World Bank have revised their economic growth forecasts, contributing to increased uncertainty in domestic and international environments.