Economy shows stable Q1 growth but weak domestic demand persists

Macau’s economy recorded “continued strengthening of macroeconomic vitality” in the first quarter of 2026, driven by strong performance in tourism, gaming, banking, and financial services, according to the latest Macau Economic Climate Index released by the Macau Economic Association (ACEM).

The association reported that key macroeconomic indicators maintained a “positive trend,” with broad money supply (M2) rising 7.9% year-on-year in February to a record MOP863.65 billion.

It also noted that the non-performing loan ratio declined for three consecutive months, while banking sector profits in the first two months of the year increased 14.3% year-on-year.

The gaming industry continued its recovery momentum, with gross gaming revenue reaching MOP65.87 billion in the first quarter, up 14.3% from a year earlier.

Tourism remained a key growth driver, with visitor arrivals exceeding 10 million during the quarter. Hotel occupancy rates stayed elevated, and employment conditions remained stable.

“These figures reflect the continued strong spillover effect of the tourism and leisure industry on the broader services sector,” the association said.

However, the report also pointed to persistent weakness in domestic demand and market sentiment.

It said consumption-related indicators remained subdued, even as mainland consumer confidence showed slight improvement. Locally, the loan-to-deposit ratio continued to fall, indicating limited appetite for credit and investment.

Asset markets also remained under pressure, with housing prices and shares of major integrated resort operators staying at low levels. The association described this as “sluggish asset market recovery and continued drag on overall confidence.”

Based on its composite model, the economic climate index stood at 6.8 in February and 6.4 in March, both within the “stable” range.

Meanwhile, the association estimated first-quarter 2026 gross domestic product (GDP) at around MOP108 billion, representing real growth of about 10% at constant prices, and recovery to roughly 93% of 2019 levels.

GDP growth for the quarter is projected to range between 8% and 12%.

For the second quarter, the outlook is expected to remain stable but cautious. The association said the economy would likely stay within a “stable range” of 6.4 to 6.7, supported by initiatives such as the 2026 Community Consumption Rewards Program and peak travel periods during the Labor Day holiday.

However, it warned that external risks remain, particularly geopolitical uncertainty in the Middle East and potential volatility in global oil prices, which could create “dual pressure from higher energy costs and weaker consumption” for Macau’s externally oriented economy.

IMF revises Macau growth to 3% in 2026

The economy is projected to expand by 3% in 2026, according to the latest outlook from the International Monetary Fund (IMF).

The estimate, published in the IMF’s April World Economic Outlook, represents a slight upward revision of 0.2 percentage points from its previous forecast issued in October. Growth is expected to pick up marginally to 3.1% in 2027.

Despite the upgrade, the IMF’s projections remain more conservative than those of other institutions.

Earlier this year, the Centre for Macau Studies and the University of Macau suggested that the local economy could grow by over 6%.

Private sector forecasts also paint a slightly more optimistic picture. Fitch Ratings Inc. expects growth to reach 4% in 2026, while brokerage CLSA has projected a 5% expansion.

The IMF also noted that inflation is likely to rise modestly to 1.8%, while the unemployment rate is expected to remain stable at 1.7%.