Ratings agency Fitch has affirmed Macau’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at “AA” with a Stable Outlook, pointing to the territory’s “exceptionally strong public and external finances” and demonstrated prudent fiscal management.
In a note, Fitch said that although Macau continues to constrained by a narrow economic base given its heavy reliance on the gaming industry, post-COVID recovery remains steady and is expected to continue throughout 2025.
“We expect the mass-market segment to continue to drive Macau’s GGR recovery in 2025, spurred by solid visitation growth from mainland China,” said Fitch analysts George Xu and Jeremy Zook.
“GGR increased by 23.8% in 2024 to reach 77.5% of its 2019 level. Mass-market GGR has surpassed its 2019 level, accounting for roughly three-quarters of the total GGR in 2024. We expect the stringent regulatory framework for junket operations and strict oversight of illegal cross-border gambling will continue to constrain the VIP segment recovery, which remains about 60% below its pre-pandemic level.”
GDP growth will likely slow in 2025, the analysts added, from 8.8% last year to 6.9% – representing more moderate GGR growth that should rise to 81% of the 2019 level – although 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, they said.
From a government perspective, Macau’s financial buffers are seen continuing to grow with Fitch anticipating budget surplus to rise to 4.2% of GDP in 2025 from an estimated 3.9% in 2024. Revenue collection is seen exceeding the government’s 2025 target, further facilitating social welfare measures and strategic infrastructure development.
However, the ratings agency remains cautious on plans to achieve genuine economic diversification despite ongoing efforts.
“We expect Macau’s new chief executive (Sam Hou Fai) will outline plans in an upcoming policy address to expedite diversification towards strategic non-gaming industries, forge closer collaboration with mainland partners to accelerate development of the Hengqin cooperation zone, and enhance social welfare with additional support to small businesses and individuals,” Fitch said.
“However, human capital constraints and skill mismatches will remain key challenges to significantly reduce Macau’s heavy dependence on gaming sector in the near term, and we expect Macau’s gaming dependence to persist.”
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