Rising geopolitical tensions between China and the United States are casting a shadow over Macau’s economic prospects for 2025, as experts caution that retaliatory tariff measures are likely to have indirect but far-reaching consequences for the city’s tourism and gaming sectors.
Trade Conflict Clouds Economic Confidence
The latest round of tit-for-tat trade measures has seen China impose tariffs of up to 84% on US imports, prompting US President Donald Trump to respond with an even steeper 125% tariff on goods from China. While Macau’s direct trade with the US is minimal—imports amounted to just over MOP$7 billion last year and exports around MOP$300 million—analysts say the ripple effects are likely to be felt through reduced consumer confidence in mainland China and Hong Kong, Macau’s main tourism markets.
Lau Pun Lap, President of the Macau Economic Association, highlighted this risk, stating, “Although Macau would not be directly affected by the tariff policy, there would be an indirect impact. Fortunately, Macau’s fiscal reserves remain strong and can withstand a certain degree of economic impact.”
Macau’s service-based economy is particularly exposed to shifts in external demand. “The tariffs will have an impact on the export of integrated tourism services, especially under the uncertainty of the global economy which would affect the consumer confidence of travelers and investors,” Lau explained. This comes as mainland visitors comprised 72% of Macau’s 2024 tourist arrivals, with over half from the export-heavy Guangdong Province.
Growth and Revenue Forecasts Downgraded
These developments have already led to a revised economic growth forecast. The University of Macau now projects the city’s GDP will grow by 6.8% in 2025, down from the previous estimate of 7%. Scholars from the University’s Centre for Macau Studies pointed to “a decline in visitor spending” as a key reason for the adjustment.
Supporting this assessment, the latest figures from Macau’s Statistics and Census Service revealed that non-gaming visitor spending dropped 14.6% year-on-year in 2024. Overnight visitors spent an average of MOP3,884, down 8.2%, while same-day visitors spent MOP691, a 12.7% decline.
Vitaly Umansky, senior analyst at Seaport, projected that Macau’s gross gaming revenue (GGR) will grow 6.5% in 2025, driven primarily by a stronger second half. However, the early months of the year have underwhelmed. Only MOP$57.6 billion in GGR was recorded in the first quarter, raising doubts over whether the government’s annual target of MOP$240 billion will be achieved. Lau estimates that annual GGR might fall between MOP$228 billion and MOP$230 billion.
Adding to concerns, the offshore Renminbi recently dropped to a 10-year low, which Lau warned could dampen tourism spending further.
Monitoring Tourist Sentiment and International Outreach
The Macau Government Tourism Office (MGTO) is actively tracking the impact of the tariffs on mainland tourists’ confidence. “At the moment, we are observing what is happening. Of course, we always have to remain very alert,” said MGTO Director Maria Helena de Senna Fernandes. While she does “not yet” foresee a sharp drop in tourist arrivals, she admitted, “the situation could change.”
To mitigate potential downturns, MGTO is continuing with existing marketing strategies and international outreach. Macau will host major events such as the European Travel Agents’ and Tour Operators’ Associations (ECTAA) meeting in June and the APAVT annual congress in December, both expected to boost international engagement.
Illegal Currency Exchange Adds to Short-Term Pressures
The gaming industry also recently faced disruption from a police crackdown on illegal currency exchanges operating through jewelry shops on the Cotai Strip. Authorities arrested 33 individuals accused of laundering approximately HK$590 million (US$74 million). Although this operation dismantled networks in two major resorts, insiders say similar gangs persist elsewhere, affecting casino operations and customer liquidity.
Balancing Risks with Structural Resilience
Despite the setbacks, government officials and academics remain cautiously optimistic. Lau noted that 70% of Macau’s current gaming revenue comes from the mass market, reducing reliance on volatile VIP segments. “Gross gaming revenue in the first quarter of this year grew by 0.6% year-on-year and could improve if economic uncertainties diminish in the second half of the year,” he said.
Meanwhile, the University of Macau forecasts stable employment with a projected unemployment rate of 1.7%, while service exports are expected to grow by 6.8%, and inflation is forecast to stay at a modest 0.7%.
Still, Secretary for Economy and Finance Tai Kin Ip has advised prudence, acknowledging that fiscal revenue may fall short of expectations and emphasizing careful financial management amid uncertainty.
Source:
Gov’t closely monitoring impact of China-US trade war on tourism, Macau Business, April 10, 2025.
