Moody’s has kept its credit rating of “Aa3” on the Macau economy unchanged, due to the territory’s solid fiscal position and the external positioning of its government, the agency said in a statement released on Wednesday.
Moody’s, which also kept the outlook on Macau at “stable”, stressed that strong financial capacity and stable external conditions will continue to give the Macau Special Administrative Region significant capacity to cope with possible future shocks.
The statement said that further progress in diversification towards an economy that is less dependent on gaming and gambling would mean that Gross Domestic Product growth would see lower volatility.
It nevertheless noted that Macau remains susceptible to potential economic and other measures taken by Mainland China that could jeopardise the gaming and tourism sectors.
The “Aa3” rating is the fourth highest on Moody’s ranking list, and all “Aa” categories considered to be of high investment quality as they are subject to very low credit risk.
The document points out that Macau’s capital reserve was estimated at 566 billion patacas (about US$70 billion) at the end of March 2019, which is equivalent to seven years of the public spending forecast for 2018 and around of 130% of the Gross Domestic Product recorded that year.
It also points out that even during the economic downturn of 2014/2016, which saw a fall in revenues from gaming, Macau’s tax revenues and foreign reserves increased.
The agency expects the current account surplus in the territory to exceed 30% of GDP in 2019 and 2020 due to the increase in the number of tourists and the gross revenues of the casinos. (Macauhub)