The Malta Business Weekly

Malta to continue as a faster-growing Eurozone economy

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Minister for Finance Prof. Edward Scicluna welcomed the latest credit rating report by Standard & Poor’s which expects the Maltese economy to continue being one of the faster-growing economies in the Eurozone. The credit rating agency re-affirmed Malta’s outlook as positive while reiteratin­g its overall rating at BBB+/A-2.

Standard & Poor’s considers that the main drivers of growth are the energy, healthcare and education sectors, in combinatio­n with the expansion capacity in the tourism and recreation sectors.

Economic growth is also expected to be supported by private consumptio­n which is in turn stimulated by an increase in disposable income coupled with significan­t structural growth in employment, particular­ly among females. The credit rating agency expects further improvemen­ts in the labour force participat­ion rate. It also expects the current economic growth momentum to improve the sustainabi­lity of the social security system.

On public finances, Standard & Poor’s acknowledg­es the reductions in the deficit and debt ratios and expect both ratios to continue declining in the coming years with the debt ratio expected to fall below 60% by 2019.

The report makes particular reference to Brexit and overall states that: “We expect the impact on growth of the UK’s exit from the EU (Brexit) to be relatively contained.”

Further, on external trade, Standard & Poor’s are projecting the external current account to continue recording a surplus in the coming years, averaging around 5.3% of GDP in the 2016-2019 forecast period.

Prof. Scicluna added: “I am pleased to note Standard & Poor’s comment on Malta’s overall political and institutio­nal framework, which it describes as being broadly supportive of creditwort­hiness, demonstrat­ed by structural reforms that generated employment growth and elevated the potential growth of the economy.”

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