The European Commission has cleared the Malta Budget for 2017, while warning that house prices are set to increase in the coming years because of growing demand.

in a report on all the member states, issued today, the European Commission noted how in Malta, the current account surplus decreased somewhat in 2015, reflecting also the impact of a strong increase in import intensive investment.

Export market shares have been on a persistent downward trend since 2009, in particular due to exports of goods. However, cost competitiveness developments have been favourable as rising productivity and moderate wage developments have kept unit labour costs in check and the real effective exchange rate mildly depreciating.

The private debt-to-GDP ratio is on a firmly downward trend on the back of orderly deleveraging among non-financial corporations and robust economic growth.

House-price dynamics remained subdued in 2015, but growing demand is expected to result in an upward pressure on prices in the coming years.

Government debt continued to decrease, the commission observed, Labour-market conditions remained favourable and unemployment low. 

The Maltese parliament is expected to vote on the Budget next week.