Growth and employment up, inflation and deficit down

Even though the Government is continuing with its policy of strong assistance to firms and families, it is still managing to reduce the deficit.

The first Quarterly Review published this year by the Central Bank of Malta covers our country’s economic performance in the third quarter of last year. The main headlines from this publication are that, while economic and employment growth have both increased, inflation, the fiscal deficit, and the national debt burden dropped. This happened while, across Europe, economic growth has completely disappeared.

According to the Central Bank’s experts, the economic upturn in Malta was driven by export growth, mainly from tourism. Domestic demand also remained sustained, mainly as household consumption strengthened further. In their analysis, Central Bank economists point out that business conditions are better than the historical average, and this is also reflected in an above-average economic sentiment. This is so much so that, according to the report, the use of the country’s productive resources is above the normal level.

On the one hand, we have an unemployment rate that has reached a historic minimum of 2.5% while, on the other hand, there was a bigger increase in employment than in the previous quarter. For the second quarter in a row, employment increased at a lower rate than that of national wealth, indicating that productivity continues to rise.

Despite the economic acceleration, inflation fell from 6.2% in the second quarter of 2023 to 4.9% in the following quarter. At the same time, there was a sharp improvement in the deficit, which fell from 4.2% to 3.4%, while the national debt remained below 50% of the GDP.

All this indicates that, even though the Government is continuing with its policy of strong assistance to firms and families, it is still managing to reduce the deficit. This is because the strategy of stable energy prices has led to our economy continuing to grow, contrary to what is happening in Europe.      

Photo: Egor Kunovsky

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