Outlook for the Maltese Economy 2017-2019

Economic activity in Malta is expected to remain robust over the projection horizon, supported by both demand and supply factors.

In particular, the energy reforms that have taken place in recent years, new investment projects, increased labour market participation and robust services exports are the primary drivers supporting the economic expansion.

Real GDP growth is projected at 4.4% in 2017. It is then expected to decelerate to 4% in 2018 and 3.5% in 2019.

As a result, the labour market is projected to remain tight, with the unemployment rate falling further to 4.5% in 2017, before picking up slightly to 5.1% by 2019.

Consumer price inflation is expected to pick up this year as the contribution of energy prices is envisaged to turn positive. Annual inflation, based on the Harmonised Index of Consumer Prices, should rise from 0.9% in 2016 to 1.4% in 2017. It is then projected to trend up to 1.8% by 2019, reflecting a pick-up in international commodity prices and domestic cost pressures.

In terms of public finances, the general government balance is expected to remain in surplus between 2017 and 2019. Meanwhile the debt-to-GDP ratio is projected to fall below 50%. More details on the bank's latest projections can be found on the Central Bank of Malta’s website at https://www.centralbankmalta.org/en/economic-projections.