Defying the odds

The ability of a small open economy to navigate a deteriorating global landscape highlights the effectiveness of government policies and the adaptability of the private sector.

The American multinational investment credit rating agency and provider of financial research and analysis, Moody’s, has given a substantial number of European countries – such as France, Estonia, Lithuania, Latvia, Czechia, and Slovakiam – a negative outlook. Even the mighty USA has just been given a negative outlook on its sovereign credit rating. In contrast, it has confirmed Malta’s A2 credit rating and stated that it has a stable outlook.

Moody’s experts argue that our country is “an economy that is dynamic, wealthy and diversified”. They based their position on the fact that our economic growth is always near the top of the EU country league. They also believe that, despite worsening global conditions, the Maltese economy will continue growing strongly due to strong internal demand, a buoyant labour market, as well as a sustained level of investment.

Moreover, even though global demand is at a standstill, they still think Malta’s exports will manage to increase. The Moody’s report states that the tourism sector has recovered two years earlier than predicted and is well above pre-pandemic levels of activity. This is mainly due to diversification both in source markets and thanks to new niches, including religious tourism and gastronomy. The report, in fact, points out that there are 35 restaurants in Malta listed on the Michelin guide.

Another factor praised by Moody’s experts is the continued expanstion of the gaming and financial services sectors. This flies in the face of the predictions of doom and gloom made by the Opposition, particularly after the FATF decision.

The rating agency also praised the sound management of public finances. Rather than criticising the large support being provided to firms and families, they state this was a “comprehensive policy response”. And, once again, contrary to the Opposition’s narrative, they are not overly worried about the national debt. This is so much so that in the report they say that “despite the severity of the pandemic shock followed by the current energy crisis, Malta’s debt-to-GDP ratio remains lower than its prior 2011 peak (70%).”

Once again, Malta’s economy is defying the odds. For a small open economy to grow despite such a worsening international environment is testament to the excellent policy response of the current administration and the resilience of the country’s private sector.

Main photo credit: Piotr Kowalonek

0 0 votes
Article Rating
Notify of
Inline Feedbacks
View all comments