European Commission revises Malta’s economic growth projection upwards to 4.6%

Malta’s estimated economic growth is projected to reach 4.6 per cent in 2024, and will ease slightly to 4.3 per cent in 2025.

While Malta’s economic growth has increased it also remains above the Euro area average of 0.8 per cent for 2024.

The latest projections formed part of the European Commission’s winter economic forecast for 2024, published on Thursday (today).

“The economy growth is set to be driven by net exports and private consumption, which should continue to grow strongly even if at a lower rate than in the previous two years,” the Commission noted.

It commented that investment growth is expected to pick-up after the construction slowdown, while public consumption is set to remain strong. Nonetheless, with regards to 2025, it is projecting that the growth rate of consumption, investment and net exports to stabilise at slightly lower levels in comparison to 2024.  

Overall, the Maltese economy has surpassed previous expectations. Real GDP growth is estimated to have remained strong at 6.1 per cent in 2023, following “exceptional growth” in 2022.

This surpasses the projections made in the Autumn Forecast, which attributed to upward revisions of economic activity during the first two quarters of the previous year and high growth of 2.4 per cent in the third quarter.

On the other hand, gross fixed capital formation declined, amid weaker construction activity in 2023. The base effect of the acquisition of aircraft in 2022 also weighed on investment growth.

The growth rate in the final quarter of 2023 is estimated to have been moderate driven by a recovery in imports to support strong domestic demand at the end of the year.

Meanwhile, the Harmonised Index of Consumer Prices (HICP) inflation in 2023 reached 5.6 per cent, “despite energy prices being kept at 2020 levels by Government intervention.”