IMF Projects Steady Recovery for Macau as Region Diversifies Economy

Business is a greasy pole – you go up, you go down. Macau has been struggling in the past two years has been all but deprived of its main revenue sources, casino gaming and tourism. This has not stopped the special administrative region (SAR) from continuing panning. 

It has overhauled its licensing procedure for casinos and is now developing tourism beyond gambling. The idea is not to achieve a short-term bonanza but rather a sustainable mid to long-term recovery and economic uptake.

IMF Charts Recovery Course 

The International Monetary Fund (IMF) cautions that the region may take until 2025 to recover to pre-pandemic levels. Macau’s GDP is projected to grow by 15% this year as foreign tourists begin to return, but a more noticeable increase will only happen in 2023. 

However, even a return to normal would still require making up for the financial and economic losses incurred during the nadir of the pandemic. Compared to 2019, when GDP was $55.15 billion, Macau posted only half that in 2020 with GDP plummeting to $24.33 billion. 

The recovery in 2021 marked a 17 % increase, but the IMF and local authorities expect 2023 to be stronger, with the projected numbers set at 23% growth. The pandemic has not been a bad thing necessarily, as it highlighted a major painpoint that needed addressing. 

Macau has become too complacent and reliant on its gambling industry which, while generating a solid buck over the past decades, has been an inefficient pillar of the economy, as recent events have exemplified. 

Bitter Medicine Helps the Patient 

This has spurred sweeping changes, including the suspension of junket operators and the introduction of revised licensing agreements for casinos. 

Macau’s gambling industry, though, has proven as the backbone of the economy, with local casino groups cognizant that they would need to support the region to have a chance to pass regulatory muster when the issuance of new licenses begins. The IMF said:

“Although the strong financial support and the financial strength of Macau SAR’s casino groups cushioned employment and consumption, the sharp decline in activity exposed Macau SAR’s vulnerabilities to external forces affecting the inflow of tourists.”

IMF

Without services, though, Macau’s SAR’s economy has remained weakened but quietly charting a course to recovery that would allow it to transcend overreliance on a single economic branch. 

As Macau pushes away from its gaming industry, though, the “re-intensification” of the COVID-19 pandemic begins to look like a much smaller risk compared to when it all started in 2020.