Malta’s economy has been given a good assessment by Brussels even though the deficit is expected to increase slightly in 2015.

In its Autumn Economic Forecasts published this morning, the Commission said that economic activity in Malta continued to outperform the weak growth in the EU in the first half of 2014 and a strong rebound in investment is projected to boost growth to 3% in 2014, before moderating somewhat over the next two years.

On the other hand, the budget deficit, which according to the Commission’s assessment will fall to 2.5 per cent of GDP by the end of the year, is expected to increase slightly to 2.6 per cent next year and fall back to 2 per cent in 2016.

According to the Commission, economic growth is being driven by buoyant domestic demand, particularly thanks to investment and public spending. Net exports also contributed positively as a drop in exports, driven by further contraction in the electrical machinery industry, was more than offset by the decline in imports.

On the negative side, the Commission commented on increased public spending particularly where it comes to an increase in government and public sector employees.

The Commission said that despite the restrictions on recruitment envisaged in the 2014 budget, employment in the public sector has increased due to the temporary nationalisation of the transport system as well as higher recruitment mainly in the health and education sectors.

Meanwhile, reporting on the eurozone as a whole, the Commission said another year was needed for the zone to reach even a modest level of economic growth.

In its autumn estimates, the EU executive said the eurozone's economy would expand 0.8 percent this year, 1.1 percent next year and by 1.7 percent in 2016 - a level the Commission said six months ago would be achieved next year. The delay in the upturn was due to drag on the economy from France and Italy.