News - News Releases 2018

10/08/2018 15:00:00

Outlook for the Maltese Economy 2018-2020

The Central Bank of Malta's latest projections foresee economic growth over the coming three years to remain strong from a historical perspective, though at lower but more sustainable levels than in 2017. These projections feature a downward revision in growth in 2018 and 2019 when compared to the previous set of forecasts, reflecting lower than anticipated outturns in the first quarter of 2018. Nevertheless, growth will remain high, supported by both demand and supply factors. In particular, the continued impact of the energy reforms, new investment projects and increased labour supply are expected to keep potential output elevated. Domestic demand, driven by higher consumption and investment, is anticipated to be the primary driver supporting the economic expansion over the next three years.

As a result of fast economic growth, the labour market is projected to remain tight, with the unemployment rate remaining low at 4.3% by 2019.

Annual inflation, based on the Harmonised Index of Consumer Prices (HICP), is projected to edge up to 1.9% by 2020, reflecting a pick-up in domestic wage pressures.

With respect to public finances, projections for the general government balance have remained unchanged, as a downward revision in tax revenue and sales growth was offset by a downward revision in government investment and intermediate consumption. Government finances are expected to remain in surplus over the coming years. Meanwhile the debt-to-GDP ratio is projected to decline to around 40% by the end of the projection horizon.

More details on the Bank's latest projections can be found here.

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