Chief Executive Sam Hou Fai told legislators on Tuesday that Macao would face a budget deficit this year if gambling revenues continue to fall short of official targets.
Speaking at a Q&A session following Monday’s policy address, Sam highlighted the importance of gambling to Macao’s economy and its government’s coffers – given that more than 80 percent of tax revenues come from the industry.
He also acknowledged that first quarter gross gaming revenue (GGR) “did not meet the expected average monthly target stated in the 2025 Fiscal Budget.”
Monthly GRR averaged 19.22 billion patacas (US$2.4 billion) between January and March, while the official forecast had been for it to reach 20 billion patacas (US$2.5 billion) – culminating in 240 billion patacas (US$30 billion) for the year.
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“The imbalance in our fiscal structure is serious and we must maintain a strong sense of crisis awareness,” Sam said. “Macao is a small city, yet our regular expenditure is substantial and it will continue to grow unless we face up to extreme circumstances.”
GGR’s subdued performance, even before US President Donald Trump’s eye-watering 145 percent tariff rate on most Chinese imports kicked in this month, does not bode well for the rest of the year.
The vast bulk of Macao’s gamblers visit from the mainland – in particular the country’s manufacturing hub of Guangdong province. However, the trade war is expected to have a major effect on discretionary spending by Chinese consumers.
JP Morgan analysts recently described the SAR as likely to take a hit from “second-order impacts” of US tariffs – such as China’s expected economic slowdown and weakening yuan – and lowered their GGR forecast for 2025.
