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.
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.
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