The international rating agency Moody’s confirmed our country’s A2 rating. This rating level was achieved in July 2019, before the outbreak of the pandemic, and is the best rating achieved by our country since September 2011.
Moody’s experts noted that this rating reflects “an economy that is dynamic and well diversified… elevated wealth levels that support shock resilience… strong debt affordability”. The report indicates that economic growth this year should exceed 4% and this is “a relatively robust rate in light of the weakening economic outlook” globally.
This positive trend will be due to strong domestic demand as well as significant investment. While the tourism industry is expected to bounce back well this year, the report claims that “continued rebound in tourism presents upside potential for growth in 2022”. Moody’s experts thus believe that if tourism continues to perform at the rate it has picked up in recent months, economic growth this year could even exceed their forecasts.
Noting the impact of the war in Ukraine on growth and inflation in Europe, the economists of this credit agency say that compared to other countries the direct impact on Malta is expected to be limited. The report notes that while inflation is higher than it was before, “Malta’s current rate of inflation is among the lowest in the euro area” and well below the European average. A strong element behind this development is the government’s strong fiscal support, which Moody’s calculates to be equivalent to 3% of our country’s gross domestic product. Despite this support, these experts believe that the fiscal deficit will decrease while the national debt burden will remain below 60%.
Moody’s report also speaks about the general election and notes Labour’s third consecutive victory. This is expected to lead to further institutional reforms to strengthen governance and the rule of law. The report also notes our country’s progress in completing the action plan agreed with the FATF. In fact, if the FATF makes a decision in favour of Malta in June, Moody’s report claims that this is capable of affecting our country’s rating positively.