Macau’s economy is forecast to shrink around 54%, year-on-year (YoY) in 2020, but rebound by over 60% YoY in 2021, according to the latest report published by Fitch Ratings.
The city has already seen signs of recovery in the third quarter (Q3) of this year, with the decline in its GDP reducing from -68% YoY in the previous quarter to -63.8% YoY in Q3.
The American credit rating agency attributed this growth to several factors. They include China’s phased reinstatement of travel visas to Macau and a rebound on local consumer and business sentiment, which have been driven by the city’s stable pandemic situation and a series of financial stimuli rolled out to boost the local market.
In the coming fourth quarter, the GDP growth of Macau is expected to improve “given the low base effect and the gradual recovery of tourism and gaming,” the agency said.
However, Macau’s economic rebound will still be limited to a degree until an effective vaccine is widely distributed. The factors that limit recovery are the soon-to-expire relief measures, persistent travel restrictions in global destinations and the weak labor market.
Earlier in November, local economist José Luís de Sales Marques, told the Times that “Macau would not have a V-shaped recovery” as the Chinese outbound tourism market, despite its strong recovery speed, is behaving cautiously towards Macau.
The red tape of conducting the Covid-19 test and a decline in disposable income among mainland travelers, particularly the high-rollers in the VIP sector, will also be factors in hindering the recovery of the city’s economy. Staff reporter
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