Malta set to lead EU economic growth until 2027, Commission forecasts

Malta is expected to register the strongest economic growth in the European Union until 2027, according to the European Commission’s spring economic forecast published on Thursday.

The report projects Malta’s economy to grow by 3.7% this year, the highest rate among the EU’s 27 member states. Growth is then expected to ease only marginally to 3.6% in 2027, after reaching 4% last year.

Despite the slight slowdown, Malta is forecast to remain the bloc’s fastest-growing economy, well above the EU average growth rates of 1.1% in 2026 and 1.4% in 2027.

The Commission attributed Malta’s strong performance largely to its services sector, particularly tourism, which it said “outperformed expectations in 2025”. The tourism industry is expected to remain resilient despite global geopolitical uncertainty.

Malta is also forecast to record one of the strongest employment growth rates in Europe, with employment expected to rise by 3.9% in 2025. Although job growth is expected to moderate in the coming years, unemployment is projected to remain low at around 3%.

At the same time, the Commission noted that Malta was among the countries registering a relatively sharp increase in unemployment between mid-2025 and early 2026, with a rise of 0.6 percentage points.

Inflation is expected to edge upwards to 2.7% in 2026, driven mainly by higher international energy prices. However, the Commission said the government’s policy of subsidising energy prices would help shield consumers from the full impact of these increases.

The report also paints a positive picture of Malta’s public finances, with both the deficit and debt levels expected to remain comfortably within EU limits over the coming years.

The fiscal deficit is forecast to decline from 3.4% in 2024 to 2.2% the following year, supported by stronger government revenues linked to economic growth and improved tax collection.

Nevertheless, the Commission highlighted rising government expenditure, including substantial increases in the public sector wage bill and a one-off €71 million compensation payment awarded to former National Bank shareholders following a court ruling.

Tax revenues are expected to weaken slightly in the coming years as tax cuts announced in last October’s budget begin to take effect, while expenditure is projected to rise because of the growing cost of energy subsidies.

Even so, Malta’s fiscal deficit is expected to remain stable, edging down to 2.1% by 2027.

The country’s debt-to-GDP ratio is forecast to stabilise at around 46% over the next few years, according to the Commission.