Macau’s gross domestic product is set to shrink by less than ten percent in 2016, according to economist Albano Martins, a notable improvement from the double‑digit drop recorded last year. He noted this improvement would be the first time the economy avoids a double‑digit decline since 2014.
Economist forecasts single‑digit contraction
Martins told the outlet that early‑year data suggest a milder decline than the 21.9 percent fall seen in the first quarter of 2015. He expects the annual contraction to land between 5.8 percent and 7 percent. The 5.8‑7 percent range reflects his view that gaming revenues will level off more quickly.
The outlook rests on a projected slowdown in the fall of gaming revenue. “Everything suggests that the gaming industry will contract less in the coming months and there will be even two, maybe three months of positive growth,” he said, adding that the slowdown may tighten further in the second half of the year.
His worst‑case estimate aligns with the International Monetary Fund projection released in April, which called for a 7.2 percent decline in 2016 and a return to growth the following year. The IMF’s April outlook also expected a return to growth in 2017, matching Martins’ optimism.
Ratings agencies and monetary authority weigh in
Moody’s downgraded Macau’s sovereign rating from Aa2 to Aa3 in May, citing a “sharp weakening of the economy” and a limited governmental response to falling gaming revenues. The agency also sees a contraction in 2017, though it expects the pace of decline to ease. Moody’s highlighted the gaming sector’s volatility as a key risk, contributing to its rating downgrade.
In the medium term, Moody’s projects real GDP growth to stabilize between 1.5 percent and 2 percent annually. The Monetary Authority of Macau earlier this year said the economy would continue to “adjust” in 2016, but less dramatically than in 2015, reflecting a less gloomy outlook for the gaming sector.
Tourism remains a key variable.
While the rating agency paints a darker picture, the monetary authority has not released concrete forecasts, leaving room for speculation about policy measures.
Given the data, it seems plausible that modest recovery in tourism could cushion the downturn, yet the reliance on gambling makes the economy vulnerable to external shocks. If gaming revenues hold steadier than expected, the contraction might stay at the lower end of the forecast range.
Historical context of the downturn
Macau’s GDP fell 20.3 percent in 2015, reaching 368,700 patacas (about US$46.08 billion). The decline has persisted since the third quarter of 2014, the first year since the 1999 handover when GDP slipped by 0.9 percent.
