The Maltese economy is expected to grow by 4.6% in 2017 according to the European Commission's Spring 2017 Economic Forecast that was just released. The report anticipates an even higher growth rate for Malta in 2017 and 2018 compared to the numbers published in the Winter 2017 Economic Forecast, which projected a rate of 3.7% for both 2017 and 2018. Next year, Malta is now expected to grow by 4.4%. This rate is almost three times the Eurozone average of 1.7% in 2017 and 1.8% in 2018.
The Maltese economy also performed above expectation in 2016, when the GDP expanded by 5% driven primarily by exports of services in iGaming and professional services.
Table of Malta's growth composition from the European Commission's Spring 2017 Economic Forecast.
One major factor behind the forecasted growth of 2017 is the rise in private consumption fuelled by disposable income gains. The services exports are also boosted in part by the proceeds from the citizenship programme.
Rising labour market participation among women is anticipated to continue over the forecast horizon, contributing to an employment growth of 2.9% in 2017-2018. Domestic consumption could be spurred by the strong growth but might be offset by the uncertainty of the earlier than expected elections. An additional boost to investment is expected from the launch of the Malta Development Bank.
The European Commission also assesses that the government’s decision to increase the minimum wage might drive up private consumption even further, but could be offset by rising costs for employers. An additional factor for Malta’s growth prospects is the ongoing Brexit negotiation.
The government debt-to-GDP ratio, which is often cited as pivotal for improving Malta’s sovereign credit ratings, is forecasted to drop to 52.5% in 2018.
Access the full report here.