Macao’s tourism recovery has restored visible momentum to the city’s economy, but a new assessment says the rebound has not yet translated into a broad revival in household demand or business investment.
The Fund’s Executive Board completed its latest consultation on 24 September, with the detailed assessment released days later. Its central message is that the economy has remained resilient in the face of external pressure, but the recovery still depends heavily on gaming and tourism. That leaves Macao exposed if the visitor economy slows or if spending patterns continue to change.
Visitor arrivals surpassed their pre-pandemic level in 2025, according to the assessment. Yet gaming revenue remained below its earlier peak. The report also points to a structural change within the sector: the recovery has been led more by the mass market, while high-end gaming has a smaller role than before the pandemic. The distinction matters because tourism numbers alone do not show how much income is reaching other parts of the economy.
Recovery has not spread evenly
The assessment says stronger visitor flows have not produced a broad-based recovery in domestic demand. Consumption and investment remain subdued, while the non-gaming economy is operating below its potential. Tight credit conditions, uncertainty, a weak property market and slower-than-planned execution of public spending are identified as factors holding back a wider revival.
This creates an awkward contrast for policymakers. Macao has considerable fiscal and external buffers, and the tourism sector is again attracting large numbers of visitors. But economic slack can persist if private companies delay investment and households remain cautious. The report expects the non-gaming output gap to narrow gradually rather than disappear quickly.
The near-term growth outlook is still positive, but less rapid. The assessment projects real output growth of 3.3 per cent in 2026 and 3.1 per cent in 2027, after stronger growth in 2025. Slower expansion in mainland China and Hong Kong is expected to weigh on Macao’s external-facing economy over the medium term. That is a reminder that the territory’s performance remains closely tied to the wider regional cycle.
Diversification moves from ambition to delivery
The policy response urged in the report is not simply to seek more visitors. It is to use Macao’s fiscal room more effectively, starting with better delivery of budgeted spending and capital projects. Investment in physical infrastructure, digital capacity and skills is presented as a way to strengthen demand now while creating activity beyond gaming over time.
Macao has set a target for non-gaming activities to account for 60 per cent of gross domestic product by 2030. The assessment says reaching it will require more investment in skills, talent attraction, infrastructure and the business environment. Support from public funds, it adds, should be targeted, time-limited and linked to performance so that diversification does not become an open-ended subsidy system.
Regional integration is another part of the strategy. Closer links with the Greater Bay Area could broaden opportunities, but the report suggests that this must be matched by more effective public administration and stronger links between education and industry. Digitalisation and artificial intelligence may support productivity, provided data governance, cyber safeguards and worker-transition measures keep pace.
Risks remain tilted downwards
The assessment describes the balance of risks as tilted to the downside. It lists a worsening of geopolitical conflicts, renewed trade tensions, financial-market volatility and cyber threats among the pressures that could damage confidence and growth. Greater competition in gaming, climate-related disruption and a prolonged local property downturn are additional risks identified in the report.
Financial stability is therefore central to the wider economic plan. The assessment judges the banking system resilient, while recommending continued attention to lending standards, provisions and capital buffers. It also cautions that property-related tools should be calibrated carefully so that efforts to support the market do not encourage excessive risk-taking.
The broader conclusion is measured rather than alarmist. Tourism has given Macao a powerful recovery engine, but it cannot on its own deliver a balanced expansion. The next phase depends on whether public spending is implemented effectively, private investment regains confidence and diversification becomes visible in jobs and productive capacity rather than remaining a long-term objective.
