Malta’s real GDP growth remains strong at 6.1% – European Commission

After exceptional growth in 2022 (8.1%), Malta’s real GDP growth is estimated to have remained strong at 6.1% in 2023, the European Commission said Thursday in its winter report.

This is higher than projected in the Autumn Forecast and is due to upward revisions of economic activity in the first two quarters of last year and high growth of 2.4% in the third, the report said in its section about Malta.

Private consumption and net exports grew strongly. By contrast, gross fixed capital formation declined, amid weaker construction activity in 2023. The base effect of the acquisition of aircrafts in 2022 also weighed on investment growth.

Growth in the last quarter of 2023 is estimated to have been moderate given an expected recovery of imports to support strong domestic demand at the end of the year, the report said.

In 2024, growth is revised up compared to autumn, to 4.6%. It is set to be driven by net exports and private consumption, which should continue to grow strongly even if at lower rates than in the previous two years.

Investment growth is expected to pick-up after the construction slowdown and public consumption is set to remain strong, the report said.

Growth in 2025 is forecast at 4.3%, broadly unchanged from autumn, with the growth rate of consumption, investment and net exports stabilising at slightly lower levels in comparison to 2024.

HICP inflation in 2023 reached 5.6%, despite energy prices being kept at 2020 levels by government intervention. Inflation in 2024 and 2025 is forecast at

2.9% and 2.7% respectively, with continuing pressures in food and services prices while retail energy prices are set to remain stable due to government intervention. These forecasts are lower than in the Autumn 2023 Forecast.