The city’s Prosperity Index may rise from 2.8 – its level at the end of last year – to 3.1 at the end of April, the Macau Economic Association (ACEM) has forecast.
Based on existing data and scenarios, the ACEM expects the index for January 2022 will remain at the same level as December 2021. For February, a small increase of 0.1 is expected.
The group did not justify its prediction of a minor increase, but it is believed to be related to the Lunar New Year holidays that launched the month.
Preliminary data shows that tourist arrivals have risen quite significantly, with the figure reaching 28,000. Two hotel operators – Angela Leong from SJM Resorts, S.A. and Linda Chen from Wynn Macau Ltd. – reported that some hotels have recorded full occupancy.
Data from the government, meanwhile, revealed an average hotel occupancy rate of 60%.
The index for March and April is expected to reach 3.1 points. The association referred to the IMF’s economic and financial conclusions on Macau released last month, which projects that the city will have 15% growth in GDP this year and 23% next year.
In addition, the IMF report also predicts that Macau’s GDP may surpass pre-Covid levels in 2025.
Given this optimism, the ACEM remains wary of difficulties. It specifically pointed to the high transmissibility of the Omicron variant of SARS-CoV-2, which may cause potential complications for the global economic recovery.
Meanwhile, two major economies, China and the US, are expected to see economic slow-downs more severe than initially predicted. This may bring the projected global economic recovery rate down from 4.9% to 4.4%, according to a forecast by the IMF.
Political factors are also critical for achieving or obstructing further recovery in Macau, the association pointed out. For example, geopolitical complications currently observed between the US, Ukraine and Russia are among the many factors to consider.
These factors may, according to the IMF and as cited by the ACEM, result in weak productivity and inflation in fuel, food and metal prices.
The epidemiological conditions in Hong Kong are also a factor of concern for Macau, as tighter restrictions will mean slower normalization of border crossings. Pre-Covid, tourists from Hong Kong accounted for nearly 20% of all visitor arrivals in Macau.
In terms of gaming revenues, analysts are expecting slightly higher gaming revenue for February following the increase in visitor numbers to the region during the Lunar New Year.
Bernstein Research forecasts gross gaming revenue (GGR) for February will likely be up 29% from January. January GGR dropped 20.3% month-to-month to MOP6.34 billion. This decline coincides with a series of new outbreaks in the neighbouring region, causing local authorities to impose strict border entry measures to deter the spread of Covid-19 variants.
