OPINION – Summer of 25: Lots of rain and some good news!

Summer has arrived in full strength in Macau and southern China with the whole package of extreme heat, typhoons, heavy rain and thunderstorms. Recent torrential rains, caused by the passing of Typhoon Podul on 15 August, reached levels of rainfall not seen in decades. They are a stark reminder of how severe climate change is, how rapidly it is affecting Macau and southern China with extreme weather, and how much remains to be done to ensure that heavy flooding in the region becomes a thing of the past.

Taipa was the area most affected, with floodwater turning streets into torrents and leading to damaged vehicles, landslides, the collapse of old buildings and water leaking from the roofs of some of the most modern facilities on the Cotai Strip. Macau’s low-lying areas and even Coloane were also affected, though not as severely as Taipa and Cotai, leaving many residents and tourists in highly inconvenient circumstances. It was a stress test for the drainage system, revealing the need for an overall assessment of its responsiveness and of existing problems, which may be linked to the high volume of ongoing public and private construction and repair works in those areas, as well as to underlying issues associated with landfilling and reclamation carried out over decades, never before subjected to such extreme conditions. Fortunately, there were no human casualties, and authorities were swift in responding to distress calls.

Contrary to previous episodes of heavy rain, the new drainage and flood-prevention system recently installed at the Inner Harbour area appeared to perform well, prompting residents and businesses to believe that the inconveniences endured for months are finally paying off. The time is ripe for an overall requalification of that pillar of Macau’s urban identity, enhancing landscape and waterfront while preserving its most authentic cultural features.

Summer is also the peak season for tourism, and visitor arrivals are bringing encouraging news for economic recovery. According to recently released DSEC data, Macau’s economy rebounded in the second quarter of 2025, with GDP growing year-on-year by 5.1 per cent in real terms, to MOP 100.39 billion, lifting the first semester’s economic output to MOP 200.15 billion, a 1.8 per cent real increase. Major contributors to the second-quarter result were exports of services, which rose year-on-year by 6.0 per cent, induced by a 20 per cent surge in visitor arrivals. Government final consumption, private consumption and gross fixed capital formation also recorded slight growth of 1.1 per cent, 0.3 per cent and 1.8 per cent, respectively. Government policies to boost consumption and the mainland’s visa policies facilitating intra-regional mobility were major drivers of economic output, underpinning the slight recovery of the first six months after the first quarter’s downturn of –1.3 per cent. Government investment in equipment and construction, at 19.9 per cent and 83 per cent respectively, contributed to the positive result in gross capital formation, notwithstanding the strong negative impact of a 28.4 per cent downturn in private construction.

Overall, public policies and short-term measures were key to the modest economic recovery in the first semester, stimulating market demand, particularly by attracting visitor arrivals from the Greater Bay Area, amid global economic prospects that remain sluggish, affected by geopolitical tensions and geoeconomic uncertainties. The latest IMF forecast projected global growth at 3.0 per cent, with “Emerging and Developing Asia” at 5.1 per cent – the highest in the world (IMF, Economic Outlook, July 2025).

A further look into July’s tourism statistics helps decipher Macau’s real prospects in the coming months. According to the latest DSEC release, visitor numbers rose 14.5 per cent year-on-year to 3,458,366 in July 2025, averaging 111,560 per day. Of these arrivals, 57.3 per cent were same-day visitors, an increase of 24.1 per cent year-on-year, while 42.7 per cent were overnight visitors, up 3.7 per cent year-on-year. The average length of stay remained unchanged at 1.2 days overall, with overnight visitors staying an average of 2.4 days. By origin, 2,563,212 visitors came from mainland China, of which 1,225,642 (47.8 per cent) were from the nine mainland cities of the Greater Bay Area – an impressive figure that rose 23.0 per cent compared with July 2024, benefiting from updated visa policies. Zhuhai’s contribution was crucial, with growth of 56.8 per cent in the same period.

Public policies and short-term measures were key to the modest economic recovery in the first semester, stimulating market demand, particularly by attracting visitor arrivals from the Greater Bay Area, amid global economic prospects that remain sluggish, affected by geopolitical tensions and geoeconomic uncertainties

On a different note, international visitors remained underperforming, totalling 177,774 in July, up 2.8 per cent year-on-year. East and Southeast Asian markets showed mixed performances, with only Indonesia, Thailand and Singapore improving, by 9.7 per cent, 48.9 per cent and 2.9 per cent, respectively, over the same period last year. Regarding long-haul markets, the US showed promising growth of 6.2 per cent. In the first seven months of 2025, total visitor numbers reached 22,676,906, a year-on-year increase of 14.9 per cent, with all monthly figures higher than last year’s, except February 2025.

As a result, although per-capita non-gaming spending by visitors fell by 12.3 per cent to MOP 1,950, the high volume of arrivals was able to offset these losses, levelling first-semester spending at MOP 37.86 billion, a 0.2 per cent increase year-on-year. Worth mentioning is the relatively high per-capita spending by visitors attending live shows and competitions, as well as those who came to Macau for MICE events. The average hotel occupancy rate remained very high at 89.1 per cent throughout the first semester, while the average room rate (ARR) at properties under the Macau Hotel Association (MHA) was USD 180 for a five-star room, slightly lower than in 2024. Comparing Tourist Price Indexes (TPI), hotel accommodation prices declined by 13.29 per cent over the period – not necessarily a negative outcome, as it helps local properties remain competitive in the wider regional context and sustain Macau’s recognition as Asia’s Best Convention Destination for the third year in a row.

Overall, Macau is continuing its path to recovery, using 2019 GDP levels as a benchmark. In 2025, the first quarter’s mild contraction of –1.3 per cent in real GDP growth was reversed by strong gaming revenues in the second quarter, which grew 8.3 per cent year-on-year, fuelling GDP growth of 5.1 per cent in real terms for that period. Moreover, GGR exceeded MOP 21 billion for three consecutive months, a level last seen in January 2020 (MOP 22.126 billion), a pre-Covid result. Government coffers were replenished as fiscal reserves rose to MOP 647.3 billion, a year-on-year increase of 7.4 per cent – just 2.5 per cent short of the all-time high of MOP 663.6 billion recorded at the end of February 2021 (Macau Business/Lusa, 21 August 2025).

GDP recovery in the second quarter continued to depend on strong growth in visitor arrivals, particularly from mainland China and nearby Greater Bay Area cities, with positive impacts on GGR and the entire range of tourism-related services. Macau’s GDP performance still depends heavily on this sector. The direct or indirect influence of visitor growth on the community economy remains to be determined, although the MSAR government is directing many resources towards promoting demand in different districts of Macau and the islands. Businesses, however, still have low confidence in the market, and their representatives continue to urge the government to introduce consumer stimulus packages.

Against this climate of uncertainty, it is good news that two leading executives in the Macau government have had their terms of service extended. Helena de Senna Fernandes will continue to head MGTO for another two years. Appointed director of MGTO in 2012, she must be one of the most experienced tourism executives in the world, having faced the toughest of challenges through Covid and beyond, while remaining the face of Macau’s most demanding and crucial sector. Meanwhile, Fanny Vong, rector of the University of Tourism, was first appointed head of the institution in 2001, when it was still called IFT (loosely translated as the Institute of Tourism Training). As the main training and educational institution for the sector, it has thrived in excellence, improving its international ranking year after year. It is fair to say that Fanny Vong led the transformation of a “school on the hill” into a world-class university – one of the best in its category.