According to the European commission’s autumn 2019 economic forecast, Malta’s economic growth for the next two years is expected to be strong but grow at a moderate pace as compared to its previous years.
Malta’s real GDP growth rate for 2020 and 2021 is expected to stand at 4.2% and 3.8% respectively; Making it the highest in the EU. The Mediterranean islands’ GDP growth for the base year 2019 stands at 5%, the second-highest after Ireland's 5.6%.
Malta’s robust domestic demand is one of the driving factors for the country’s steady economic performance.
According to the commission’s forecast, as Malta’s export and private consumption growth moderates, the economic growth rates are expected to slow down. Large-scale projects outlined in the health, aviation and tourism sectors are set to boost private investment. Residential construction investment is expected to be moderate after several years of strong growth.
Second Lowest Eurozone Unemployment
Irrespective of a slower pace, the unemployment rate is at a record low with continued employment growth. Despite the constant skill and labour shortages, the wage pressures are contained due to a net influx of foreign workers and higher local labour market participation.
Moderate economic growth is likely to also affect and slow down the fast pace of job creation but Malta would still be the second-lowest in the eurozone for 2020 and 2021 after Germany. At 3.5% and 3.6% for 2020 and 2021, unemployment in Malta will be just 0.1% higher than that in Germany.
The government of Malta said that the economic activity in Malta remained vibrant despite the conditions in the EU are expected to deteriorate.
“This means that, although the government will significantly increase public spending, and the 2020 Budget included various measures benefitting the elderly, families and the disabled, the budgetary surplus is expected to remain stable,” the government said.
It also added “In fact, in the next two years, the increase in recurrent public expenditure is expected to be double the European average, while public investment is set to be 1.5 times the eurozone average. Despite this, the European Commission’s experts are predicting that, by 2021, Malta’s national debt is expected to drop to under 39% of GDP,”