The forecast of such a high figure comes from the removal of pandemic control measures and resumption of mainland packaged tours as well receding labor shortages, and also the supply-side capacity constraints that will materially lift the visitation numbers for 2023.

“Macau is well placed to capture strong pent-up demand from mainland tourists, given its status as the sole legal gaming tourism destination across Greater China and its geographic proximity to the mainland. A faster-than-expected revival of visitors poses an upside risk to the recovery outlook,” the institution said.

For the gaming sector, Fitch expects the mass-market segment, which accounted for three-quarters of total gaming revenue in 2022, to drive the recovery.

In December of 2022, the six gaming operators renewed the concession contract for the next 10 years, fully pledging to focus on diversification of the local economy with an investment of over MOP100 billion.

The reported MOP100 billion investment from the casinos during the bid proposal period was considered unsurprising, despite the sector bleeding cash with no certainty of recovery.

However, the institution expects this to be slow, amid the operators’ moves in launching non-gaming offerings.

“We expect the diversification into non-gaming industries to remain slow. Human capital constraints and skill gaps pose a key challenge for Macau to substantially reduce its high dependence on the gaming industry,” said the institution.

Also, junket operators will remain “sensitive to tight regulatory scrutiny in both Macau and mainland China.”

Meanwhile, Fitch forecasts Macau’s budget deficit will decline to 10.5% of GDP in 2023, from 35.5% in 2022, expecting a deficit for the fourth consecutive year.

“The narrower deficit this year mainly reflects a surge in gaming revenue collection and an unwinding of pandemic-related relief measures. We project the deficit will fall to 1.9% of GDP in 2024 on buoyant gaming revenue and expenditure restraint,” the group noted.

Regarding the city’s integration with Mainland China, the group expects that the integration 

will lead to a stronger role in policymaking for the central government and a gradual convergence of governance and institutional management practices with mainland China.

Currently, the SAR is the only city in China where gambling is legal. However, for Fitch, citing integration, its “baseline assumes that the convergence will not affect the status of Macau as the only legal gaming tourism destination across Greater China.”

By Lynzy Valles