The level of the SAR’s gross domestic product (GDP) is expected to surpass its precrisis level only in 2025, given the depth of the economic losses during the pandemic, according to a forecast made by the International Monetary Fund (IMF).
The city’s recovery is likely to continue across 2022 due to the strong fiscal support and the financial strength of the gaming operators, which has cushioned employment and consumption.
However, the sharp decline of economic activity exposed Macau’s vulnerabilities to the effect of external on the inflow of tourists, according to the report.
The pandemic’s impact on the city’s growth only highlights the lack of diversification beyond the gaming industry.
In early 2020 at the beginning of the pandemic, Macau only welcomed a total of 5.9 million tourists, a staggering decrease of 85% compared to 2019 when the same period of time welcomed some 39.4 million tourists. Across 2020, the aggregate GDP shrank by 54% year-on-year, mostly due to the collapse of service exports.
This massive drop in tourist arrivals led to a lower GGR which only stood at approximately MOP60.44 billion in 2020 and MOP86.86 billion in 2021.
“The crisis brought Macau SAR’s overreliance on the gaming sector into sharp relief. The gaming sector—the key growth driver in the past two decades—almost came to a stop as tourist flows dried up,” the report noted.
The travel corridor which lifted quarantine requirements for qualified visitors between Macau SAR and the mainland breathed life into the stagnant gaming sector.
The IMF estimates that the economy expanded by 17% year-on-year in 2021, helped by the partial recovery of the gaming sector.
It also projected that GDP will grow by 15% this year.
“The financial sector weathered the pandemic well, but pockets of vulnerability are emerging. The banking system remains well capitalized with solid levels of liquidity and profitability,” the report stated.
The preliminary assessment is that Macau SAR’s overall external position remains “substantially stronger than warranted by mediumterm fundamentals and desirable policies.”
The IMF added that the current account surplus in 2021 is estimated at less than half of the level observed in 2019 due to the still relatively low tourism receipts, even though they increased relative to 2020.
This year’s GDP will be boosted by increasing investment linked to the issuance of new gaming concessions and further integration with the Guangdong-Hong Kong-Macao Greater Bay Area (GBA). According to IMF, growth is expected to accelerate to 23% in 2023 before gradually converging to its longterm potential of around 3.5% over the medium term.