Fitch forecasts a slowing of Macau’s GDP increase to 6.9 percent in 2025, from 8.8 percent in 2024, as gross gaming revenue ‘is likely to rise more gradually to roughly 81 percent of its 2019 level after a rebound in 2024’.
The group indicates that it expects that GDP growth will be supported by ‘continued, but slower, gaming tourism recovery, along with favorable visa policies for mainland visitors, non-gaming investments and enhanced tourism infrastructure.’.
One particular point is that ‘a sharp slowdown in the Chinese economy, such as from substantial US tariff hikes, and sharp yuan depreciation pose downside risks to Macau’s prospects’.
Given Macau’s stark turn away from the VIP sector, Fitch analysts point out that they ‘expect the mass-market segment to continue to drive Macau’s GGR recovery in 2025’.
The group indicates that mass-market GGR in 2024 ‘has surpassed its 2019 level, accounting for roughly three-quarters of the total GGR in 2024’.
Total Macau GGR in 2024 amounted to MOP227 billion ($28.4 billion), surpassing targets but still not reaching all expectations.
The VIP segment levels are expected to remain at about 60 percent below pre-pandemic levels this year, due to ongoing constraints from mainland China on punters and cross-border money flows. Further drops have not been ruled out.
Diversification attempts
While Macau has long pledged non-gaming diversification for its economy, the simple reality of its setup has made such a thing more difficult. Gaming revenues continue to contribute up to 85 percent of the government’s income, but hopes are to change that.
Fitch analysts point out that increased cooperation in the neighboring zone of Hengqin could help ‘strategic non-gaming industries’ and create partnerships with mainland Chinese partners to develop the region which sits across the border from Macau’s Cotai Strip.
Analysts at Fitch affirm Macau at ‘AA’ with a ‘Stable’ outlook.
