Sus­tained eco­nomic growth – Eu­ro­pean Com­mis­sion

The Malta Business Weekly - - FRONT PAGE -

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.

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