Malta’s economic expansion is expected to continue with the support of buoyant domestic demand, but the pace of growth will ease slightly, according to the European Commission’s Spring Economic Forecast.
Analysing the present situation, the report stated that the external surplus remains at historically high levels, due to the strong performance of the export-oriented services sector. “Sustained job creation and low unemployment are creating an increasingly tight labour market. Inflation is set to increase only marginally over the forecast horizon. The fiscal position remains sound although the high surpluses recorded in recent years are set to decline.”
The forecast said that Malta’s economy performed better than expected in 2018, with real GDP growth reaching the high rate of 6.6 per cent. Economic growth accelerated in the second half of the year, driven by record-high levels of private consumption growth, which increased by 7.3 per cent compared to the previous year. “In particular, robust employment growth coupled with modest price pressures in the household consumption basket contributed to boost households’ real disposable income.”
Going forward, the forecast expects private consumption growth to slow down but remain well above its historical average.