Macau to retain strong growth: Fitch

Fitch Ratings predicts Macau’s year on year growth to remain strong, at 15% in 2024 from 76% in 2023, off the back of sharp rebounds in gaming revenue.

In its recent Greater China Outlook 2024 report, the institution forecast that, despite ongoing growth headwinds for greater China, Hong Kong, Macau and Taiwan all retain robust fiscal and external credit buffers to manage their challenges.

“Macau was affirmed at ‘AA’/Stable in March 2023. The ratings are sensitive to recovery in gaming, maintenance of fiscal buffers, and – like Hong Kong – the evolution of mainland China’s rating,” the institution said in the report.

Macau’s gaming tourism underpins growth prospects as the city’s gross gaming revenue (GGR) reached MOP164.5 billion from January to November, exceeding the government’s expectations of MOP130 billion for the whole of 2023. The figure also represents about 61% of pre-pandemic levels.

Fitch’s baseline assumes GGR will recover further to 79.3% of 2019 levels in 2024, driven primarily by solid growth in the mass-market segment.

“Strong performance in gaming tourism will also be bolstered by the government’s stepped up  efforts to boost long-haul travellers and greater utilisation of the Hong Kong-Zhuhai-Macau Bridge in the coming year,” the report stated.

“We expect fiscal buffers to remain substantial, equivalent to more than five times our projected 2023 budget expenditure – a key credit strength,” the report added.

As part of its multi-year plan through to 2028, the government has been ramping up its efforts to facilitate economic diversification towards targeted strategic, non-gaming industries.

Macau’s Big Six have already pledged nearly USD12 billion in non-gaming investments following the granting of licenses earlier this year.

All six gaming operators have contributed hefty amounts as part of their individual commitments, funding city-wide investments in tourism, sports, and fine dining.

However, amid Macau’s economic diversification, Fitch believes that “human capital constraints and skill mismatches will remain key challenges for the territory to substantially reduce its overwhelming dependence on the gaming sector.”

Fitch has forecast the city’s gaming industry to reach some MOP231 billion in revenue, according to the agency’s recently released Global Gaming Outlook 2024 report.

Meanwhile, concerning mainland China, Fitch sees its growth to ease to 4.6% from 5.3% in 2023. Hong Kong’s growth is also set to edge back from 3.2% to 3.0% in 2023, as it sustains its modest rebound from the Covid-19 pandemic.