Fitch tips Macau economic rebound at 65pct this year
Fitch tips Macau economic rebound at 65pct this year
Blog Article
Fitch Ratings Inc forecasts Macau’s economy will “rebound sharply,” by as much as 65 percent this year, exceeding by 19 percentage points a 2023 recovery estimate the institution made for the city in December 2022, before the relaxation of travel restrictions linked to the Covid-19 pandemic.
This year’s rebound would be helped by “sustained” recovery in gaming tourism during the last quarter of the year. The 65-percent growth expected this year contrasts with the 26.8-percent economic contraction in full-year 2022.
Macau’s recovery would come “despite a weaker economic rebound in mainland China, as the territory remains the sole legal gaming tourism destination across Greater China”.
The Macau assessment was given in a Monday report called “Asia-Pacific Sovereigns – Peer Review”.
In credit-rating terms, Macau is considered a sovereign issuer of debt, notwithstanding its position as a special administrative region of China. Macau currently carries an “AA/Stable” rating with Fitch, based on the most recent review on March 24.
The institution said in its latest commentary on Macau: “We project economic growth will remain robust at 17 percent in 2024, with full-year gaming revenue recovering further to almost 80 percent of its 2019 level.”
The city’s casino gross gaming revenue (GGR) reached MOP128.95 billion (US$16.0 billion) in the first nine months of this year, or 58.5 percent of pre-pandemic level, according to official figures.
Under Macau’s new, 10-year gaming concession system that came into effect on January 1, the effective tax on casino GGR is 40 percent.
Despite the territory being “about to record a budget deficit for the fourth consecutive year, Macau remains the only entity in Fitch’s global sovereign portfolio without any outstanding government debt, which puts it 온라인카지노 well below the ‘AA’ median of 44.7 percent of GDP [gross domestic product] and ‘A’ median of 54.0 percent projected for 2023,” stated the institution.
Macau’s ratings were underpinned by the territory’s “exceptionally strong public and external finances, and prudent fiscal management even during periods of negative revenue shocks”.
Though Fitch voiced a reservation frequently mentioned by the Macau government itself – the relative narrowness currently of the city’s economic base, with its focus on casinos and tourism, services especially tied to serving mainland China consumers.
The city has an ongoing policy drive toward diversification into areas including financial services, traditional Chinese medicine, and high-level technology.
Fitch reiterated Macau’s current “vulnerability to policy shifts that may affect China’s treatment of gaming tourism”.
Currently however, the ratings institution expects Macau’s fiscal reserves to remain “considerable, equivalent to more than five times” Fitch’s projection of the city’s 2023 budget expenditure.
Fitch expects Macau’s current-account surplus will widen to 25.6 percent of GDP in 2023, and that the city will maintain its large net external creditor position at 246 percent of GDP, which the ratings house describes as “a significant strength relative to its ‘AA’ peers”.