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News - Media Releases 2019

08/02/2019

Outlook for the Maltese economy 2018-2021

The Central Bank of Malta's latest projections foresee economic growth over the coming years to remain strong from a historical perspective. Projections to economic activity have been revised upwards for 2018 due to stronger than expected private consumption growth. Conversely, economic activity in 2019 was revised marginally down due to the envisaged weaker international outlook. During the projection horizon, growth will remain high, supported by both demand and supply factors. In particular, 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 remain the primary driver supporting the economic expansion over the projection horizon. Net exports' contribution to growth is expected to turn negative from 2019, reflecting higher import growth.

The pace of job creation is set to moderate, but remain strong. The labour market is expected to remain tight, with the unemployment rate projected at 4.0% by 2021.

Annual inflation, based on the Harmonised Index of Consumer Prices (HICP), is projected to edge up to 2.1% by 2021, reflecting a pick-up in domestic wage pressures.

Government finances are expected to remain in surplus over the coming years, such that the debt-to-GDP ratio is projected to decline to below 40%.

Looking ahead, the external environment has become less positive in recent quarters, which poses downside risks to projections of economic activity and inflation. Conversely the risks to public finances are to the upside (higher surpluses) due to possible slippages in the implementation of locally-financed investment projects.

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

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