The Central Bank of Malta’s latest economic projections foresee strong economic growth over the coming three years from a historical perspective, though somewhat lower than in 2017.

The CBM has revised its previous forecasts upwards, reflecting a stronger expansion in private consumption and in net exports.

It said that growth in the coming years would be supported by both demand and supply factors.

“In particular, the continued impact of the energy reforms, new investment projects, increased labour market participation and robust services exports are the primary drivers supporting the economic expansion.”

It warned that the labour market was projected to remain tight, with the unemployment rate falling further to 4.1% in 2017.

“The unemployment rate is expected to pick up somewhat subsequently, as the pace of activity moderates, although it is set to remain low from a historical perspective over the entire projection horizon,” it said.

Annual inflation, based on the Harmonised Index of Consumer Prices (HICP), should rise from 0.9% in 2016 to 1.2% in 2017, partly reflecting higher international fuel prices. It is projected to trend up further to 2.0% by 2020, reflecting a pick-up in domestic cost pressures.

In terms of public finances, the general government balance is expected to remain in surplus between 2017 and 2020. Meanwhile the debt-to-GDP ratio is projected to fall to just above 45%.