Characterising the Maltese economy as one that “maintained a strong growth trajectory” last year, the European Commission puts the country’s estimated 2018 GDP growth at 6.2% in its Winter 2019 Economic Forecast published on Thursday. Praising a “particularly brisk expansion” in Q3, the EC tags Malta as “one of the most dynamic economies in the EU” for the period.
The economic forecast describes picking up domestic demand replacing net exports, hence becoming the primary driver of growth as of Q2 2018. The EC talks about a “buoyant private consumption”, which they believe reflects strong employment growth, increasing disposable income and a massive accumulation of savings in the past years.
The forecast also mentions that the country’s export growth slowed due to a weaker external environment, as well as a decrease in goods export, while imports started recovering due to domestic demand.
“I am impressed by the European Commission’s forecast which, has once again, revised its forecast for our economy against a weaker external environment upwards,” says Minister for Finance Edward Scicluna, according to a press release issued by the Department of Information of the Maltese government on Thursday. “The Commission has downgraded the Eurozone’s economic forecast amid Brexit and trade tensions,” the minister adds.
Although the commission forecasts further GDP growth of 5.2% and 4.6% in 2019 and 2020, respectively, the pace is thought to slow down due to moderating global demand. The speed is also seen to stay reliant on the domestic market, underpinned by high private and public consumption.
At the same time, the EC envisages large-scale infrastructure projects in the health, tourism and real estate sectors fuelling investment growth, while the current account surplus might likely remain high due to “significant trade surplus of the internationally-oriented services sector,” the report says.
The EC notes that consumer price inflation (CPI) started growing in Q2 2018, reaching 1.7% by year-end, and with materialising wage pressures and expected wage growth, the figure could gradually creep up to 1.9% in 2020.
The full report is available for download at the official website of the European Commission.