IMF: Recovery to continue with 15% growth in 2022
The Macau SAR’s economic recovery is expected to continue, but it will take time before the economy fully regains its losses from the pandemic, according to a report issued by the International Monetary Fund (IMF).
The city’s recovery is forecasted to continue this year, with IMF projecting a 15.5% GDP growth in 2022, driven by the gradual return of foreign tourists and the recovery of domestic demand.
After a 54% decline in GDP in 2020, the economy expanded by 18% in 2021, supported by the partial recovery of the gaming sector.
According to the IMF, economic growth is expected to accelerate to 23% in 2023 before gradually converging upon its longterm potential of around 3.5 percent over the medium term – 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).
“The gradual return of foreign tourists and the strengthening of domestic demand will support the nearterm recovery, while increasing investment, linked to the issuance of new gaming concessions, and further integration with the GBA will boost medium term growth,” the IMF stated. “However, given the depth of the economic losses during the pandemic, the level of GDP is expected to surpass its precrisis level only in 2025,” the report read.
Due to the absence of rapid progress towards economic diversification, the current account balance is set to return to pre-pandemic levels as tourists return to the region.
While the effective control of the pandemic and faster-than-envisaged integration with the GBA could contribute to stronger growth than currently envisaged, a re-intensification of the pandemic, tighter regulation of the gaming industry, and an increase in Macau SAR’s financial sector stress could slow down the pace of the recovery.
These remain the SAR’s most significant risks, particularly in the gaming sector, as uncertainty is still present regarding the proposed amendments to Macau’s gaming law, which – in combination with the recent ban on the gaming services’ marketing in the mainland – are clouding the outlook of the gaming sector.
Also, the IMF stated that potential largescale defaults in mainland China’s real estate sector and a sudden growth slowdown in mainland China are posing risks to Macau SAR’s economy and financial system.
Recently, a forecast from Fitch Ratings stated that Macau’s economy would only expand by 19% in 2022, based on the assumption that gaming revenue would recover to about 44% of its pre-pandemic levels, far lower than the initial expectation in relation to overall economic expansion of 36%.
The city’s gaming sector is expected to tumble again this month as analysts forecast a 13% drop in gross gaming revenue (GGR) from March, which was MOP3.67 billion – a 55.8% tumble from figures recorded in February.
These are due to the Covid-19 cases in the mainland and the city’s tight border restrictions.
