‘New prosperity beckons’ – PM celebrates EU upgrading of Malta’s economic outlook

On Wednesday, Prime Minister Robert Abela was celebrating the upgrading of Malta’s economic outlook by the European Commission, proclaiming that a “new prosperity beckons”.

Taking to social media, he proclaimed that the European Commission is now predicting Malta’s economy (measured by GDP) to grow by one and a half times as much by the end of the year than they were six months ago.

Next year, he said, the Commission projects Malta’s GDP to grow 6.1 per cent – one and a half times the EU average.

Dr Abela, who is currently in quarantine with his wife, Lydia Abela, after she tested positive for COVID last week, was referring to the updated economic forecast released by the EU on Wednesday. These projections show that after the economically ruinous 2020, where Malta’s GDP dropped by seven per cent, it will return to its pre-COVID levels during 2022.

With regards to unemployment, the EU expects Malta’s unemployment rate to hover at its slightly inflated 2020 level – 4.3 per cent – for the rest of the 2021, before falling to 3.8 per cent in 2022.

This is slightly higher than the same figure in 2019, when 3.6 per cent were unemployed.

In less positive news, the Commission predicts that the Government balance will remain negative through 2022, climbing to – 11.8 per cent in 2021, before falling to – 5.5 per cent in 2022.

In 2022, Government debt is set to increase to 65.5 per cent of the country’s GDP, a slight increase on the 2021 figure of 64.7 per cent.

Outside of Malta, the European Commission has also predicted a slightly improved outlook from that indicated in the winter forecast, due to two main factors:

Firstly, it expects a stronger-than-previously expected rebound in global activity and trade. Second, “and not least”, there will be the growth impulse coming from the integration in the forecast of the initial boost of the Recovery and Resilience Facility.

Overall, the EU economy is forecast to grow by 4.2 per cent in 2021 and to strengthen to around 4.4 per cent in 2022. In the euro area, GDP growth is forecast at 4.3 per cent this year and 4.4 per cent next year.