In the Central Bank’s economic outlook publication, the economists at this institution decided to revise upwards their forecasts for Malta’s economic growth while lowering those of the Government deficit, the unemployment rate, and inflation.
In their report, the economists noted that, at the time the forecast was made, the official figures on third quarter economic growth had not yet been released. These were far more positive than forecasted by the Bank, so much so that the economists said they would eventually have to revise their forecasts for economic growth upwards again. This would also mean an additional downward revision of the deficit and national debt would be needed.
The Central Bank report observes that domestic demand remains the engine of growth, especially as private consumption and investment are going strong. When it comes to exports, the services sector, driven by tourism, is driving growth.
Inflation is expected to gradually fall until it returns to 2% in 2026 while the unemployment rate should remain below 3%.
Interestingly, the Central Bank is much more optimistic than the Government when it comes to public finances. In fact, the Bank’s economists are predicting that the deficit this year will be 4.6% and not 5%, as the Government is stating. Even for next year, the Bank’s forecasts are below those of the Government, with the deficit expected to fall to almost 3% in 2026. The national debt is projected to remain below 60%.
The Central Bank review, like those of several other institutions, indicates that Malta’s economy continues to surprise experts. While other countries are revising economic growth downwards, Malta is managing to remain an oasis of economic success.