Macau 2024 GGR May Be 80pct At 2019 Level

Fitch Ratings forecasts Macau’s economic growth rate of about “15 percent” year-over-year in 2024, assuming Macau’s casino gross gaming revenue (GGR) will recover to 79.5 percent in 2019, compared with 62.6 percent of pre-pandemic levels in 2023.

This follows the action announced on Friday. The agency confirmed Macau’s long-term foreign currency issuer default rating (IDR) as “AA” with a stable outlook.

The rating for Macau takes into account that Macau’s public and external finances are “exceptionally strong” and that it has demonstrated fiscal prudence.

Fitch Ratings further observed: “The rating also reflects the territory’s narrow economic base, the high concentration of gaming tourists in mainland China (‘A+/stable’), and vulnerability to policy changes that could affect China’s treatment of gaming tourism.”

Mainland China has long been Macau’s most important tourist source. This month, the number of Chinese cities increased from 49 to 51 when the Chinese cities of Xi’an and Qingdao were added to the mainland list to participate in the IVS, an outbound visa scheme for travel to Macau and Hong Kong.

“We expect Macau’s recovery momentum to be supported by the expansion of individual visit plans targeting more mainland Chinese cities and the government’s push for various mega-events to meet changing Chinese consumer preferences,” Fitch said in a commentary on Friday.

However, a sharp slowdown in China is a major downside risk to Macau’s economic and game recovery prospects.”

Growth in the city’s inbound tourism business, along with non-game investment commitments following a 10-year concession period by Macau casino operators, is expected to strengthen the city’s economic and gaming outlook, according to the ratings agency.

“We expect Macau’s budget to turn from a modest deficit of 0.6% in 2023 to a surplus of 3.8% of GDP in 2024 for the first time since 2020,” Fitch also said in an update on Friday.

Macau’s government expects a fiscal surplus in 2024, with the city’s casino GGR estimated to reach an annual MOP of $216 billion ($26.8 billion).

“The [Macao] government expects a slight surplus of 0.3% in 2024, but we expect gaming revenue to be 7.6% higher than budget assumptions and we believe spending will remain budget short as in previous years,” Fitch said.

Macau is the “only country” without outstanding government debt in Fitch’s global national portfolio. As of the end of 2023, Macau’s fiscal reserves were MOP580 billion.

“Fiscal buffers in the region, currently around six times the projected 2024 spending, are expected to remain substantial and maintain key credit strength over the medium term, assuming a sustained fiscal surplus,” the ratings agency said.

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