Rating agencies maintain positive tone on local economy

Both Fitch Ratings and Moody’s Investors Service have maintained their ratings of the local economy since their last report.
Fitch Ratings classified Macau’s economy as “AA-” with a “stable” outlook while, on the other hand, Moody’s gave the SAR a rating of “Aa2” on “review for downgrade” and is expecting to complete its review and make a final decision in the next three months.
According to a statement released the Monetary Authority of Macau (AMCM) on Friday, the Fitch rating is due to “the territory’s prudent fiscal strength, strong external financial position, credible policy framework and high per-capita income.”
The local monetary authority highlighted that these results are very positive signs, especially because they were given during a period of “economic adjustment,” when gross domestic product recorded a contraction of 20.3 percent. This is a sign that the SAR has still managed to maintain its high investment-grade (double-A rating), which helps to stabilize financing costs of the territory and its institutions, and reflects the public recognition by the international rating agencies of Macau’s fiscal and financial stability.
AMCM stated that the fiscal surplus last year stood at MOP29.3 billion, with the government assets reaching over MOP400 billion in the Fiscal Reserve. The employment situation is remaining stable, as the unemployment rate stays below the 2 percent mark.
During 2015 local banks reached historical highs in both profits and assets. Bank profits increased 16.3 percent to MOP12.8 billion in 2015, while their assets rose 14.2 percent to MOP1,340.8 billion, helped also by an extremely low non-performing loan ratio of 0.12 percent.
In addition, the financial industry has continued to develop their businesses, boosted with the approval of the People’s Bank of China’s decision to conduct a renminbi clearing business for Portuguese-speaking countries and with the first successfully conducted batch of credit business by the region’s banks within the mainland’s Free Trade Zones. RM