The latest financial and industrial data paint a picture of an economy marked by caution, retrenchment, and decreased dynamism in key sectors of the local economy. A 4.6% drop in total loans to the private sector, a 1.4% decrease in housing prices, and growing pessimism among manufacturers regarding exports are hindering efforts to diversify the economy beyond gaming.
Despite a 1.4% month-on-month rise in total bank deposits in May, loans to the private sector fell sharply, with loans to overseas destinations dropping 7.6% in particular. The non-performing loan ratio rose to 5.7%, worsening due to the overall decrease in loan volume — a sign of greater caution in investment decisions and increased financial risk.
In the export sector, more than 52% of surveyed industrial entrepreneurs foresee a less favorable business environment over the next six months — a sharp rise compared to 23.1% in the previous quarter. Nearly 70% cite an “insufficient volume of orders” as the main issue, with the average order backlog shrinking to just three months.
This caution directly impacts investment and plans to diversify beyond gaming, warns Sonny Lo. “Economic diversification will likely slow down, as companies may avoid investing heavily in Hengqin, although Mainland Chinese companies will continue to play a crucial role.”
Asked whether the combination of a weakening real estate sector and declining trust in exports reinforces a perception of stagnation, Sonny Lo believes these factors are beyond local control. “We must simply wait for improvements in China–U.S. relations, since the current changes are structural and not easily within Macau’s control,” he warns.
Real Estate Continues to Decline
The trend extends to real estate. The overall housing price index saw an 8.7% year-on-year decline between March and May, with significant drops across the Peninsula, Taipa, and Coloane. According to political analyst Sonny Lo, this reflects a predictable market correction: “The southern China region — and in fact, also the Mainland — is experiencing an economic slowdown due to the trade war and global tariffs. The real estate market was overheated, and its cooling is inevitable, as it was previously highly speculative and inflated by bubbles, with little government oversight.”
The impact on domestic consumption and economic sentiment is already being felt. “Consumption is likely to decrease, but household wealth may remain stable due to the population’s tendency to save. Consumption patterns are mostly affected in the retail and dining sectors, especially in northern Macau, near the border,” Sonny Lo told PLATAFORMA.
Urgent Measures Needed
Faced with this retrenchment, Sonny Lo calls for a more ambitious response from the local government, with urgent measures that promote both social cohesion and economic vitality. “The government must speed up the construction and availability of more public and transitional housing for the poor and those in need, while also increasing support for small and medium-sized enterprises through a range of assistance measures and networks offering business opportunities in Southeast Asia, Mainland China, and Belt and Road countries.”
Sonny Lo also emphasizes the importance of reinforcing traditional tourism drivers, advocating for measures to sustain public revenue and enhance the city’s attractiveness. “The gaming sector remains important for government revenues, and Mainland tourists will continue to be the backbone of the tourism industry. Cruise tourism should be accelerated, and daily transport networks must be continually reformed to make Macau truly competitive and appealing to a variety of tourists, both from the Mainland and beyond,” he concludes.
