GDP growth projection reduced to between 0.5-1.1%

The Central Bank has revised Malta's GDP growth forecast to between 0.5 and 1.1 percent this year, Central Bank Governor Michael C. Bonello said this morning. The projections for next year are for growth of between 1.0 to 1.6 percent, Mr Bonello said at the launch of the Bank's 2008 annual report.

"The degree of uncertainty surrounding the projections is exceptionally high and that risks to GDP growth are expected to be on the downside. HICP inflation is forecast to ease significantly during 2009, largely reflecting the base effect of past increases in commodity prices, but also lower locally-generated inflation. In 2010 inflation is projected to be slightly higher, mainly as a result of an expected rebound in commodity prices," the report says.

Mr Bonello had warned in an interview to Reuters last month that the Central Bank was revising its economic projections downwards.

"Our latest figure had been 1.6 to 1.7 (percent growth) for this year, but that was a long time ago before the end of 2008," Mr Bonello had said.

"For 2008 we were expecting 2.5 percent growth, and now we have the actual number, which was 1.6 percent, so this is going to have to be factored in to our new projections."

"Obviously with these latest numbers we have had from the euro area and EU, and our own fourth quarter number, then obviously our projections for this year are going to have to be revised down."

The National Statistics Office said last month that GDP in the fourth quarter of last year shrank by 1.2 percent.