Malta was yesterday given a clean bill of health by the European Commission in an economic forecast for the 27 member states.

In its winter economic forecasts for 2013 and 2014, Commission economists say Malta is expected to post above-average results, with the country clearly “gaining pace” as its economic outlook “brightens”.

According to the forecast, Malta is this year expected to report an economic growth of 1.5 per cent, improving to two per cent in 2014.

Compared with the euro area, the island’s forecast growth is the second best among the 17 eurozone members, surpassed only by Estonia’s projected three per cent this year and 3.2 per cent in 2014.

Above-average growth is also being forecast in terms of new jobs and a further reduction in unemployment is expected.

“The labour market continued to prove resilient and job creation is projected to remain robust throughout the forecast horizon, significantly outperforming the euro average area,” Brussels reports.

The Commission says it expects employment growth to have hit 1.7 per cent in 2012, largely due to the expanding services sector, while industrial employment shrank.

“As the economic outlook brightens, employment and average wage growth are forecast to strengthen and move towards the pre-crisis average.

“The unemployment rate is projected to remain among the lowest in the euro area and narrow to 6.1 per cent in 2014.”

With regard to public finances, Brussels is less optimistic than the Government on deficit and debt projections, even though the Commission’s forecasts put Malta within strict EU thresholds.

While pointing out that the 2012 Budget has not been approved yet, Brussels predicts that “in the absence of consolidation measures, the deficit in 2013 is expected to widen” to 2.9 per cent in 2013 and then narrow to 2.5 per cent the following year.

With regard to debt, the Commission estimates an increase to 73.8 per cent of GDP in 2013, falling slightly to 73.6 per cent in 2014.

The data on public finances is provisional as 2012 official figures still have to be verified and published by Eurostat, probably next month.

In its Budget estimates for 2013, the Government plans to end 2012 with a Budget deficit of 2.3 per, dropping to 1.8 per cent this year.

The Commission’s report, which is always on the conservative side, notes that risks to its projections seems to be “balanced”.

“The current uncertain political situation in Malta, ahead of the parliamentary elections in March, could have a further negative impact on consumer and business confidence and delay the recovery of domestic demand in 2013,” it states.

“On the upside, the rapidly developing financial sector could benefit from the assumed stabilisation in the euro area financial markets and resuming confidence, supporting real GDP growth.”

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