The Macao SAR Government issued a statement this week in which it said it does not agree with the decision by Moody’s Investors Service to revise downwards its outlook for Macau from stable to negative.
In the original report, published Wednesday, Moody’s pointed out that it had downgraded the mainland China government’s A1 rating from stable to negative due to the country’s weakening economy, and as a result had also downgraded Macau’s rating. This, the ratings agency explained, was because of the “tight political, institutional, economic and financial linkages between Macau and the mainland which keep the rating gap between the SAR and China no wider than one notch.”
In its response, the SAR government noted that Macau’s economy was recovering steadily and that it has “remained steadfast in its prudent fiscal management during the period of economic adjustment [while its] ample fiscal and foreign exchange reserves have enabled the SAR to have a stronger ability to cope with and defend itself against external risks.
“The Government has no debt burden, and its public finances, external revenue and expenditure position and financial situation are very sound, while the asset quality and capital level of banks remain good.”
The Macau government also pointed out that with the full resumption of people-to-people exchanges between Macau and its neighboring regions and the rest of the world, coupled with the gradual return of the tourism industry’s capacity, the growth in external demand has led to a steady recovery of the economy with year-on-year GDP growth of 77.7% in the first three quarters of 2023.
“The SAR Government will continue with a series of tourism promotion and publicity activities, coupled with the gaming concessionaires’ investment plans for non-gaming projects in an orderly manner, so as to effectively enhance Macau’s international competitiveness and enrich the connotation of Macau as a world center of tourism and leisure,” it said.
The Government outlined its belief that Macau’s close economic ties with mainland China provide strong support for its long-term development.
“The mainland’s economy is still growing at 5.2% in real terms in the first three quarters of 2023, which will have a positive impact on Macau’s external demand, despite the complex challenges of multiple uncertainties in the global economy at the moment,” it said.
China’s Ministry of Finance issued its own response to the Moody’s downgrade, stating “China’s macro-economy has continued to recover and improve, and high-quality development has been steadily progressing, China’s economy will maintain a rebound and upward trend, and China will remain an important engine of stable growth for the world economy.”
In providing its Macau outlook this week, Moody’s wrote that the SAR’s “large tourism and gaming sectors are heavily dependent on China, while its banking system is similarly exposed to cross-border claims to the mainland. At the same time, tighter political and institutional linkages have become more evident in recent years, notwithstanding the broad retention of Macau’s policy autonomy under the principle of ‘One Country, Two Systems’.”
