The European Commission has praised the progress of Malta's economy but warned that public administration still suffers from some inefficiency, and access to finance continues to pose structural challenges to investment, particularly for the private sector.

It also said that traffic congestion continues to generate considerable economic and environment costs.

The country report was the second today praising Malta's economy, after that by the International Monetary Fund.

The EU's country report on Malta says economic growth eased somewhat in
2016, but is forecast to have remained strong at 4%. Public finances have significantly improved, benefiting from the favourable macroeconomic environment, with government debt having dropped below 60% of GDP for the first time since 1998.

Nevertheless, some risks to long-term sustainability remain, in view of the projected increase in age-related budgetary costs as well as a higher-than-EU-average proportion of corporate incomes taxes in tax revenue, implying higher vulnerability to economic shocks.

Labour market developments show growth in Malta's employment rate, alongside a drop in the unemployment rate to record lows. These achievements are consistent with Malta's Europe 2020 employment target.

However, further efforts are still required.

"Even though female employment rates have steadily increased, participation of older and lower-skilled workers remains considerably low; two groups that are most at risk of poverty and social exclusion. Skills' supply does not adequately match labour market needs yet, although lifelong learning has generally improved."

The EU said gaps persist with respect to raising R&D (research and development) expenditure, further investing in renewable energy and energy efficiency measures, as well as reducing greenhouse gas emissions.

"Public administration still suffers from some inefficiency, and access to finance continues to pose structural challenges to investment, particularly for the private sector.

TRAFFIC CONGESTION

Although the adoption of the National Transport Strategy was a welcome step, the European Commission said traffic congestion continues to generate considerable economic and environment costs. 

"There are signs that the existing physical infrastructure may be insufficient to cope with the current pace of development. Despite improvements, the
quality of road infrastructure remains a concern, leading to heavy congestion. This generates considerable costs to citizens' welfare, operating costs for businesses and environmental costs.
 

Read the full report by clicking the pft below. 

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