While here in Malta, certain columnists worry about Malta’s economic model, back in Brussels the most commonly used phrase about Malta’s economy is “robust growth”.
While in its Autumn 2023 economic projections the European Commission has just halved its forecast for the Euro area’s growth rate, the revision for Malta was once again upwards. Moreover, while the Irish economy – Malta’s previous contender as the economic star of Europe – is sputtering and the country is starting to experience a declining GDP, Malta’s economic performance remains unperturbed.
The Commission’s experts, thus, classified Malta as the country with the best growth rate. Our country’s economy is expected to grow by 4% or more this year and in the next two years. The same experts have strongly reviewed their estimate of employment growth for our country, which also led to a reduction in their forecasts of Malta’s unemployment rate. This is now set at 2.7%, consistently the lowest unemployment rate predicted for a Euro area country between now and 2025. The unemployment rate in Malta is in fact expected to be well below half the European average, as economic growth on average will be around four times that in the rest of the European Union.
An important element mentioned by the European Commission is that Government measures are expected to keep energy prices stable at least until 2025. At the same time, the overall rate of inflation is expected to almost halve. The Commission’s forecast confirms that Malta’s labour market is currently expanding strongly and is the best in Europe, with the largest percentage increase in employment. Moreover, European Commission experts note that demand for more workers remains strong in several sectors.
While Opposition spokespersons claim that economic growth in our country is based on cheap labour and low value added, it is clear from the European Commission’s figures that productivity in Malta will grow this year, as well as in the next two years. This will occur at a time when a decline in productivity is expected in the Euro area this year, and then in the following two years the increase is marginal and projected to be lower than that in our country.
The European Commission’s experts also felt that they had to revise downwards their government deficit forecasts for Malta. While they previously thought that 2023 would close with an imbalance of 5.8%, this has now been revised down to 5.1%. When it comes to next year, they are now forecasting a deficit of 4.6%, against the 5.1% they had until a few months ago. Then, for 2024, the review was revised down from 4.5% to 4.1%.
As a result, Malta’s national debt is expected to remain well below 60%, while that across the Euro area will remain close to 90%. This will be the case despite the fact that our country is projected to have a public investment of 4.3% of GDP on average, in contrast with the 3.2% observed for the Euro area.
Well and truly, comparing the European Commission’s reports about the Maltese economy with some of the local media’s vacuous rhetoric, one can barely realise that one is reading about the same economy.
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