VALLETTA, June 10 (Xinhua) -- The Central Bank of Malta has revised its economic growth predictions downwards for 2024 and 2025 but remains optimistic for increased growth in 2026.
In its economic forecast report released on Monday, the central bank said Malta's gross domestic product (GDP) is expected to grow by 4.3 percent in 2024, but then ease to 3.5 percent in 2025 and 2026.
This represents a downward revision for 2024 and 2025 each by 0.1 percentage points, but an upward revision of 0.2 percentage points for 2026 compared to the bank's previous projections in February this year.
Malta's growth in 2023 was primarily driven by net exports, while domestic demand is expected to be the main driver of growth from 2024 to 2026. Net exports are also projected to contribute positively, mainly driven by services exports.
Annual inflation, based on the Harmonised Index of Consumer Prices, is projected to drop significantly from 5.6 percent in 2023 to 2.4 percent in 2024, and further to 1.9 percent by 2026, the central bank said. Compared to previous projections, inflation has been revised downwards by 0.5 percentage points in 2024, largely reflecting the unexpected and rapid drop shown in the initial months of the year.
The general government deficit-to-GDP ratio is set to decline to 4.1 percent in 2024, and to narrow further over the rest of the forecast horizon, to stand at 3.1 percent by 2026. The general government debt-to-GDP ratio is set to increase throughout the forecast horizon, reaching 54.3 percent by 2026.
"Risks to activity are broadly balanced over the projection horizon," the central bank said. Downside risks largely emanate from possibly adverse trade effects related to ongoing geopolitical tensions. However, the bank noted that the labor market could exhibit even stronger dynamics than envisaged both in terms of employment and wages. This could then result in stronger private consumption growth. ■
