Malta’s economy is expected to grow at a higher rate than the EU average in the next two years, according to European Commission forecasts published yesterday.
According to the assessment, the island’s main economic indicators are all predicted to remain positive, with growing GDP, stable employment growth, controlled unemployment levels and acceptable levels of inflation.
Public finances are also forecast to remain in check with lower deficit and debt levels over the projected two-year periodto 2016.
Brussels said private consumption was expected to be the main contributor to robust economic growth as disposable income was expected to continue to rise due to falling energy prices and unemployment.
Other factors, particularly lower oil prices and interest rates, should also provide a boost to Malta’s economy.
According to the Commission, a stronger recovery in the demand for credit, resulting from lower interest rates, could further boost the investment outlook.
Also, energy reforms could improve the competitiveness of the corporate sector and lower company costs could result in higher than expected investments and exports.
While the economy registered a growth of 3.3 per cent last year, Brussels is expecting a similar growth this year and a slight drop in 2016 to 2.9 per cent.
The Commission said the island’s labour market was also projected to continue to perform well with an improvement in labour due to more women joining the workforce. Job creation is expected to remain at two per cent a year while unemployment is forecast to remain in the six per cent region.
With regard to public finances, the Commission expects both deficit and debt to remain in check and even improve.
While the deficit was cut to 2.3 per cent by the end of 2014, it is expected to continue falling to two per cent in 2015 and 1.8 per cent of GDP in 2016.
One of the main contributors to growing government revenue is the fact that the sale of passports scheme is doing better than expected.
Debt, which at the end of last year stood at 68.6 per cent of GDP, is expected to go down further, to 66.8 per cent by the end of 2016.
The Commission expects the only downside risks for the optimistic forecast to come from variations on the government’s projected subsidy to new public transport service provider Autobuses de Leon.