Macau SAR Country Risk Report 2020

Macau SAR Country Risk Report 2020

We at Fitch Solutions forecast Macau's growth to come in at -3.8% in 2020, from our estimate of -3.2% in 2019, as an outbreak of the novel coronavirus (2019-nCoV) will see a plunge in tourist arrivals in Macau. Even if the coronavirus is contained, a prolonged slowdown of the Chinese economy would weigh on gaming revenues. Although Beijing is seeking to develop Macau's financial sector, we believe that the investment growth would remain subdued, at least until more concrete plans are announced.

We maintain Macau's Short-Term Political Risk Index score at 79.6, which reflects our view that anti-government sentiment in Hong Kong is unlikely to spread to Macau. We believe that Macau will remain economically reliant on mainland China over the coming years, as the Greater Bay Area scheme will result in deeper integra-tion of the Special Administrative Region (SAR) with the mainland. Close links between recently inaugurated Chief Executive Ho Iat Seng and the mainland suggests that political ties between the SAR and Beijing will remain strong. Mainland China will also tread carefully in terms of imposing its influence to ensure satisfaction among Macau citizens, as the SAR is increasingly playing a crucial role in displaying the success of the 'One Country, Two Systems' model.

Key Risks



Economically, the main risks facing the Macau economy comes from a protracted downturn in the Chinese economy, and/or growing competition as other countries in the region look to take some of Macau's market share in the gaming industry. Manila's nascent casino industry is a case in point.

On the political front, while we expect continued stability under the currency system, there is a growing risk that Macau's policy freedom is increasingly infringed upon as Beijing takes more of a leading role in domestic affairs.


Executive Summary
Core Views
Key Risks
Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Macau To Fall Into A Deeper Recession As Coronavirus Outbreak Weighs On Tourism
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
Outlook On External Position
Current Account Surplus To Narrow Amid Slower Tourism Inflows
TABLE: CAPITAL AND FINANCIAL ACCOUNT BALANCE
TABLE: MAIN EXPORTS AND IMPORTS
TABLE: MAIN EXPORT AND IMPORT PARTNERS
Monetary Policy Framework
Structural Fiscal Position
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
Long-Term Economic Outlook
A New Era Of Low Growth And Diversification
TABLE: LONG-TERM MACROECONOMIC FORECASTS
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings’ Credit Ratings. Any comments or data included in the report are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.Macau SAR Risk 2020ContentsPolitical Outlook
Domestic Politics
Stable Political Outlook For Macau Amid Deepening Ties With Mainland China
Long-Term Political Outlook
Continued Stability Under The One Country, Two Systems Policy
Demographic Outlook
TABLE: POPULATION BY AGE GROUP
TABLE: POPULATION BY AGE GROUP %
TABLE: POPULATION HEADLINE INDICATORS
TABLE: KEY POPULATION RATIOS
TABLE: URBAN/RURAL POPULATION & LIFE EXPECTANCY
Global Macro Outlook
Economic Stabilisation Continues And Inflation Picking Up Slowly
TABLE: GLOBAL MACROECONOMIC FORECASTS (2019-2024)
TABLE: DEVELOPED MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: MACAU – MACROECONOMIC DATA & FORECASTS

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