Seaport: China stimulus could “strengthen economy and Macau demand”
In February, Macau casinos generated gross gaming revenue (GGR) of MOP19.74 billion (£1.9 billion/€2.2 billion/US$2.47 billion). It was a welcome turnabout from the declines of December and January and a potential harbinger of acceleration to come.
But the industry must generate monthly GGR of MOP20 billion to meet government projections of MOP240 billion for the year.
For an economy that historically has relied on gaming for some 80% of government revenue, the year’s fiscal outlook “may not be as optimistic as expected” said Macau chief executive Sam Hou Fai at a 13 March Two Sessions briefing with Chinese government delegates. “And the future economic situation must be assessed with caution.”
A stimulus package from Beijing may help.
Stimulus should support moderate growth
According to Seaport Research Partners, the plan outlined at the briefing emphasises “income growth amid US tariffs, building on September’s stimulus and property market support”. All should do their part to “lift consumer confidence and demand” and increase Macau’s demand in the medium term.
Starting 24 September 2024, the Chinese central bank launched what Reuters called “the most aggressive monetary stimulus measures since Covid-19”. It featured an MOP10.88 trillion debt package, a higher budget deficit, broad interest rate cuts and looser monetary policies.
The easing of travel restrictions for Zhuhai residents, which began 1 January, has contributed to a tourism surge, for greater economic momentum.
Seaport analyst Vitaly Umansky projects 6.7% GGR growth for 2025, with mass growing 7%.
Investment firm Jefferies, which last year forecast yearly GGR of MOP245 billion, recently trimmed that GGR by 2%, to MOP240 billion. But that’s still up 5.8% year-on-year and in line with conservative government projections.
Bracing for more competition
Amid all these challenges, Macau gaming operators are also preparing for more regional competition. Japan will open its first casino resort, MGM Osaka, in 2030. Thailand could debut its first legal casinos by 2029 and, ahead of the pack is Wynn Resorts, which will open the first casino resort in the United Arab Emirates in 2027.
In the March issue of Macau Business magazine, editorial director José Carlos Matias said the developments, following Macau’s “much-cherished integrated resorts model”, make the next five years critical in determining “whether we retain our crown as a gaming-tourism hub or fall behind the curve and lose competitiveness in the long term”.
While it looks to develop new, viable industries to support casinos, Matias said the city must “enhance our existing strengths. By embedding targeted diversification efforts into the core business models of key industry players, we not only adopt a pragmatic approach, but also achieve tangible results.
“Gaming and integrated resort operators are levelling up their game,” he wrote, “and this is likely just the beginning.”