Washington, DC: On September 24, 2026, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV Consultation with the People’s Republic of China – Macao Special Administrative Region and considered and endorsed the staff appraisal without meeting on a lapse-of-time basis.[1],[2] The authorities have consented to the publication of the Staff Report prepared for this consultation.[3]
Macao SAR’s economy has remained resilient despite external headwinds, although growth continues to rely heavily on the strong performance of the gaming and tourism sectors. In 2025, the economic activity was supported by robust tourism flows, with visitor arrivals surpassing pre-pandemic levels. However, gaming revenues remain below their pre-pandemic peak, reflecting regulatory changes, strengthened AML/CFT enforcement, and evolving visitor spending patterns. Moreover, the recovery has yet to generate a broad-based rebound in domestic demand. Investment remains subdued amid still-tight credit conditions, heightened uncertainty, weakness in the property market, and under-execution of public spending. As a result, economic slack persists, while inflation has increased only modestly, driven mainly by higher food and transportation costs.
Growth is expected to moderate over the medium term, underscoring the importance of advancing economic diversification and strengthening domestic demand. Economic activity is projected to slow in line with the expected moderation in growth in the Chinese mainland and Hong Kong SAR. The output gap in the non-gaming economy is expected to close gradually over the medium term, while inflation is projected to edge up as economic slack narrows and the disinflationary effects of lower import prices from the Chinese mainland fade. Sustained efforts to diversify growth sources, deepen integration with the Guangdong-Hong Kong-Macao Greater Bay Area, and strengthen productivity will be essential to support long-term resilience and raise potential growth.
The outlook is subject to significant risks, which remain tilted to the downside. An intensification of geopolitical conflicts, renewed trade tensions, spillovers from global financial market volatility and cyber threats could weigh on growth and confidence. Additional risks stem from greater competition in the gaming industry, climate-related disasters, and a more prolonged downturn in the local property market. On the upside, faster implementation of the authorities’ diversification agenda, deeper integration with the Guangdong-Hong Kong-Macao Greater Bay Area, and stronger investment in high-value-added industries could support growth, employment, and economic transformation.
Executive Board Assessment[4]
Macao SAR growth has been resilient despite headwinds, yet driven by a strong external sector amid weak domestic demand. Growth continued to rebound in 2025, supported by strong performance in gaming and tourism activities, with visitor arrivals surpassing pre-pandemic levels. However, gaming revenues remain below their pre-pandemic peak, reflecting regulatory changes and enhanced AML/CFT enforcement, and shift in spending patterns. Moreover, the rebound in tourist arrivals has not translated into a broad-based recovery in domestic demand. Investment remains subdued amid still-tight credit conditions, heightened uncertainty, a sluggish property sector, and under-execution of public spending. Consequently, the economic slack continues, with inflation picking up only modestly reflecting higher food and transportation prices. Macao SAR’s external position in 2025 was substantially stronger than the level implied by medium-term fundamentals and desirable policies.
Growth is expected to moderate over the medium term, with risks tilted to the downside, in line with the projected slowdown in growth in the Chinese mainland and Hong Kong SAR. The output gap in non-gaming GDP is expected to close by 2030, while inflation is expected to increase slightly as economic slack narrows and the drag from lower import prices from the Chinese mainland dissipates. The main risks to the outlook include an intensification of geopolitical conflicts, renewed trade tensions, spillovers from global financial market volatility and cyber threats, greater competition in the gaming industry, climate-related disasters and a more prolonged local property market downturn. Upside risks include faster implementation of the diversification agenda, deeper Guangdong-Hong Kong-Macao Greater Bay Area integration and stronger investment in high-value-added sectors.
Given ample fiscal space, fiscal policy should aim at boosting domestic demand, fostering economic diversification and addressing population aging, guided by a well-defined MTFF.
In the near term, the priority is to strengthen execution of budgeted spending, particularly in the areas of aging-related welfare programs and capital investment. Should revenue overperform, additional spending should be considered, if feasible. Over the medium term, a well-defined MTFF could help align fiscal resources with strategic objectives and strengthen spending efficiency. Priority should be given to strengthen investment in physical, digital, and human capital and to calibrate pension and healthcare spending to maintain adequate protection as the population ages. To reduce reliance on gaming revenues, efforts to diversify the economy should be complemented by measures to broaden the non-gaming tax base, including through a periodic review of tax exemptions and incentives to ensure they are well-targeted, cost-effective, and aligned with development objectives. Public financial management and project implementation capacity should be strengthened further.
The banking system remains resilient, but continued reforms are needed to safeguard financial stability, support financial sector development while preserving financial integrity. Efforts to strengthen banks’ asset quality should continue by promoting prudent underwriting standards, adequate provisioning, and sound capital buffers. Property-related macroprudential measures should be carefully calibrated to avoid encouraging excessive risk-taking and the buildup of credit risks. Support for SMEs should be targeted and complemented by stronger insolvency and debt resolution frameworks to facilitate the resolution of non-viable firms. Continued improvement in risk-based supervision, stress testing, and credit risk monitoring remains important. The expansion of the NBFI sector underscores the need to strengthen supervisory capacity, close regulatory and data gaps, and improve risk monitoring. Regulatory and supervisory frameworks should continue to evolve alongside financial sector modernization while safeguarding stability and integrity. Ongoing efforts to strengthen AML/CFT are welcome and should be sustained.
