Maltese economy ‘expected to grow at a more moderate pace’ – Central Bank

Malta’s GDP is set to grow by 3.7 per cent this year, as was previously forecast, edging down to 3.6 per cent in 2024 and 3.5 per cent in 2025, showing a slight downward revision from previous forecasts.

The Central Bank of Malta (CBM), which released the economic forecast, said that Malta’s GDP is “expected to grow at a more moderate pace”.

The publication singles out net exports as the main contributor to GDP growth in 2023.

From 2024, domestic demand is expected to be the main driver of growth.

Employment growth is set to moderate in the projection horizon, while wages are expected to pick-up due to relatively high inflation and a tight labour market.

Annual inflation will only be marginally lower this year when compared to 2022, and is “foreseen to remain elevated due to lingering indirect effects through the response of wages to recent increases in input costs and profit margins.”

The general government deficit is set to decline throughout the projection horizon, while the general government debt-to-GDP ratio is set to edge up, and to reach 54.7 per cent by 2025.

The CBM noted that risks are tilted to the downside for 2023, and balanced thereafter.

When it comes to Government finances, risks are on the downside (deficit-increasing), particularly in 2023, it said. These risks mainly reflect the possibility of additional support measures related to Air Malta and higher than expected outlays on electricity distribution and compensation for blackouts.