Sustained economic growth – European Commission
The Minister for Finance, Prof. Edward Scicluna has welcomed the latest European Commission 2018 Spring Forecast, which expects Malta’s strong economic growth and the current account and budget balance surpluses to be sustained over the forecast period.
“The Commission has once more confirmed through its Spring Forecast, Malta’s economic and fiscal sustainability as evidenced by the forecasted fiscal surpluses and robust economic growth rates,” Minister Scicluna commented.
Indeed, the European Commission noted that Malta’s economy is among the fastest growing economies in the EU. It expects real GDP growth to average 5.8% in 2018 and 5.1% in 2019, in a context of favourable labour market conditions and high consumer confidence.
The European Commission noted that the labour supply continued to increase not only due to the inflow of foreign workers but also due to the rising participation of women in the labour market.
Over the forecast horizon, it expects this strong economic momentum to further support employment creation. As a result, the unemployment rate is forecast to remain at the record-low rate of 4%.
The 2018 Spring Forecast expects domestic demand to become the main driver of growth underpinned by the expansion in private consumption and the recovery in investment. Indeed, in 2019, investment is expected to be supported by several projects in the health, technology, and telecommunication sectors.
The European Commission acknowledges that inflation pressures remained contained and expects inflation to remain below the 2% threshold in 2018 and 2019.
On external trade, the European Commission expects the strong performance of the services sector, particularly in areas such as tourism, remote gaming and professional services, to sustain the sizeable current account surplus.
The 2018 Spring Forecast acknowledges the strong general government surplus achieved by the government in 2017, adding that it expects the surplus to be maintained this year and the next. The report expects the government debt-to-GDP ratio, which fell to 50.8% in 2017, to decline further to 43.4% by 2019.