Malta’s economy maintains strong growth amid eurozone slowdown, inflation eases to 1.8%

Central Bank of Malta publishes its quarterly review on economic developments for the fourth quarter of 2024

During the fourth quarter of 2024, annual growth in real GDP moderated when compared with the preceding period but remained above the average rate for the euro area. Growth was mainly driven by domestic demand, also when adjusting for imports.

The Bank’s estimate of the output gap narrowed, indicating some moderation in the degree of over-utilisation of the economy’s productive capacity.

The Bank’s Business Conditions Index improved slightly compared with the previous quarter and remained above its historical average. The European Commission’s Economic Sentiment Indicator increased and stood above its long-term average.

Meanwhile, the Bank’s Economic Policy Uncertainty Index, an indicator that monitors economic policy uncertainty by synthesising information gleaned from Maltese news portals increased significantly in the fourth quarter but remained slightly below its historical average. This increase primarily reflects heightened economic and political uncertainty overseas.

Developments in the labour market remained positive. The unemployment rate remained low from a historical perspective, the job vacancy rate increased slightly and the labour tightness indicator remained unchanged at a high level. According to the Labour Force Survey, employment growth in Malta was higher than the euro area average while the unemployment rate was lower.

Consumer price pressures eased further during the fourth quarter of 2024. Annual inflation, as measured by the Harmonised Index of Consumer Prices (HICP) fell to 1.8% in December, while the measure excluding energy and food stood at 2.0%. Both measures stood below the euro area average.

In the fourth quarter of 2024, the general government deficit-to-GDP ratio widened when compared to September, while the general government debt-to-GDP ratio rose. The deficit-to-GDP ratio stood wider than in the euro area, while the debt ratio was significantly lower. Over the year as a whole, both the deficit and debt-to-GDP ratios declined.

During the quarter under review, the Governing Council of the European Central Bank (ECB) lowered the policy rates by 50 basis points cumulatively amid continued signs of further disinflation.

ECB interest rates were lowered by a further 75 basis points between January and April 2025. The Governing Council stated that in current conditions of exceptional uncertainty, it will continue to follow a data-dependent and meeting-by-meeting approach in determining the appropriate monetary policy stance.

The second issue of the Quarterly Review for 2025 is available on the Bank’s website.

For more recent indicators kindly consult the Economic Update.