In a report published on 8th January, the international credit ratings agency, Moody’s, stated that Malta will have the highest rate of economic growth in the Euro area during 2024.
The experts of this agency believe Malta’s GDP will grow by 3.5%. In contrast the Euro area average growth will be just over 1%. Thus, the Maltese economy is expected to grow at three and a half times the rate observed in the rest of the Euro area. The major European economies, except Spain, are all expected to grow by less than 1% this year, while only Malta is expected to grow by more than 3%.
Moody’s economists argue that large part of this growth was due to the effective absorption of EU funds. Only Luxembourg, Italy, and Estonia are expected to have a relatively higher disbursement of EU funds than Malta this year. Moody’s experts expect the EU-funded capital projects in Malta will be worth the equivalent of between 2% and 3% of the country’s GDP. This explains why, under the current administration, public investment has always remained very sustained.
Despite this high level of investment, however, our country will have a reduction in the fiscal deficit that is well above the Euro area average. This year, the deficit will increase in 9 countries. In contrast, in Malta the deficit will fall. It is only in Malta and, to a certain extent, in Greece that the reduction in the deficit will not be due to austerity measures in energy support.
According to Moody’s, in some countries there will be major impacts due to the removal of subsidies. For example, in Slovakia there will be an impact equivalent to more than 2% of that country’s GDP. Even in Germany, there will be a strong impact, of around 1% of GDP. In contrast, in Malta the Government will be increasing support. However, Malta will remain with a national debt burden among the lowest in the Euro area. The sustained level of support on energy will also keep domestic demand buoyant and lead to superior economic results the country.
Photo: Edinson Acevedo