A top economist says that the ongoing conflict in the Middle East could cause a rise in inflation in Macau and have a negative impact on hotel occupancy rates.
Speaking to TDM Canal Macau, António José Félix Pontes, the former Executive Director of the Monetary Authority of Macau (AMCM) highlighted that “for Macau’s economy, I believe that the effect of the war is still limited”, highlighted that it is currently impacting fuel prices and supply chains the most.
“It’s predictable that the hotel occupancy rate in Macau will fall and that there will be an increase in the inflation rate,” the top economist told the broadcaster.
If the war extends for a significant period of time, Félix Pontes opines that the economic impact could be similar to that of the pandemic, highly impacting developed countries, increasing interest rates, disrupting supply chains and seriously impact production, leading to strong impacts on companies and financial markets.
This could potentially cause compression of Macau’s gross domestic product (GDP) growth, which analysts at Fitch estimated could increase 4 percent yearly in 2026, from 6.9 percent in 2025.
The economist is now expecting GDP growth of about 3 percent, potentially rising to about 3.3 percent in a best-case scenario.
The casino and hotel sector is also exposed to the economic impacts of the war, despite being better protected than small and medium enterprises (SMEs) -for which government stimulus (via subsidies) may be necessary, as rising fuel prices and supply chain disruptions increase inflation and produce higher unemployment.
Speaking to AGB before the outbreak of the war, the financial expert had noted that Macau as a whole is “insulated from financial external volatility”, due to its strong financial reserves and “stable and continuous support from mainland China”.
The expert, however noted that “Macau is not totally immune to global volatility”, with events such as a global pandemic or similar calamity cutting into its reserves.
Before the war, the economist had a very positive tone on Macau’s economy, noting that “the rebound in Chinese consumer sentiment will stay”, having been boosted by a rising stock market, leading to increased visitation and visitor spending.
Amongst the previous situation, Félix Pontes had highlighted that “US-linked operators are currently experiencing higher levels of volatility and more stock price pressure compared to their Macau-centric peers”.
This is likely to continue, given the operators’ higher reliance on US capital markets and strong US shareholder base, as well as “the debt structure and parent company dynamics”.
