People’s Republic of China—Macao Special Administrative Region: 2024 Article IV Consultation Discussions-Press Release; and Staff Report

The 2024 Article IV Consultation discusses that Macao Special Administrative Region (SAR)’s economy rebounded strongly after the relaxation of coronavirus disease 2019 containment measures in Mainland China. Real gross domestic product increased by 80.5 percent in 2023, recovering much of the decline during the pandemic. A stronger slump in the Mainland’s property sector and higher for longer interest rates in the major economies are the main short-term risks to the outlook. The secular growth slowdown in Mainland China could weigh on Macao SAR’s medium-term growth. Moreover, medium-term growth could be adversely affected by extreme climate events. The authorities should encourage banks to hold higher provisioning to bolster their shock absorbing capacity, enhance the insolvency and debt resolution and restructuring frameworks, and strengthen systemic risk assessment and monitoring. Economy-wide structural reforms focused on incentivizing R&D and innovation, upskilling and reskilling the labor force, and streamlining labor and business regulations would be key for achieving the government’s economic diversification objectives. A comprehensive assessment of investment needs for climate adaptation and its integration in the medium-term fiscal plan would buttress the authorities’ efforts to enhance the economy’s resilience against climate-related disasters.