Malta forecast to remain Europe’s fastest-growing economy through 2031 – IMF

Malta is expected to record the fastest average economic growth in Europe over the second half of the decade, outperforming every other European economy despite a broader slowdown across the continent, according to the International Monetary Fund (IMF).

The IMF's latest World Economic Outlook projects that Malta's economy will expand by an average of 3.96 per cent annually between 2027 and 2031, placing it ahead of Kosovo (3.95 per cent), Ukraine (3.78 per cent), Serbia (3.52 per cent) and Moldova (3.5 per cent).

By comparison, the euro area is forecast to grow by an average of 1.2 per cent per year over the same period, while the European Union is expected to average 1.4 per cent annual growth.

The projections mark Malta's continued economic resilience at a time when much of Europe is expected to grapple with weak productivity growth, ageing populations, high public debt, elevated energy costs and ongoing geopolitical uncertainty.

The IMF notes that Malta's strong economic performance over the past decade has been driven by sectors including tourism, online gaming, professional services and financial services, supported by a significant influx of foreign workers.

However, it warns that the country's current labour-intensive growth model is reaching its limits.

With unemployment remaining close to historic lows and labour shortages becoming more pronounced, the IMF says Malta can no longer rely primarily on expanding its workforce to sustain economic growth.

In its recent assessment of the Maltese economy, the IMF stated that while the inflow of foreign workers has fuelled economic activity, it has also placed increasing pressure on infrastructure and public services, highlighting the need for a more sustainable growth model.

Looking ahead, the Fund argues that maintaining Malta's strong growth will depend increasingly on improving productivity rather than expanding employment. It recommends strengthening public finances while increasing investment in infrastructure, education and innovation to raise the country's long-term growth potential.

Although Malta leads the European rankings, global growth is expected to remain stronger overall. The IMF forecasts world economic growth of around 3.15 per cent annually between 2027 and 2031, while emerging and developing Asia is projected to grow by approximately 4.6 per cent a year.

According to the IMF's medium-term forecasts, Malta is therefore expected to remain one of Europe's standout economic performers, even as growth across the wider region slows significantly.