Malta's Central Bank Revises GDP Growth Forecast Upwards

According to the bank, the country's GDP is now expected to grow by 3.8 percent in 2024, and then edge down to 3.6 percent in 2025, and further down to 3.3 percent by 2026.

For 2024, this implies an upward revision. The outlook for 2025 remains unchanged.

The bank said that domestic demand is expected to be the main driver of growth, as private consumption continues to increase at a brisk pace and private investment is beginning to recover. Net exports are also projected to contribute positively, driven mainly by growth in services exports.

Employment growth is projected to be moderate, while wages are expected to pick up in 2024, due to relatively high inflation and a tight labor market.

The annual inflation rate (Harmonised Index of Consumer Prices, HICP) is projected to ease from 5.6 percent in 2023 to 3 percent in 2024 before reaching 2 percent in 2026.

"It is thus foreseen to remain above the Eurosystem price stability objective next year due to lingering indirect effects through the response of wages to recent increases in input costs and profit margins," the bank said.

The bank's economic growth forecast is slimmer than that of the European Commission. In its autumn forecast published in November, the Commission said that Malta was set to enjoy the strongest economic growth rate in the EU.

The Commission said it expected Malta's GDP growth to reach 4 percent next year. While energy prices are set to remain unchanged until 2025 due to the government's measures, inflation was still projected to reach 5.7 percent this year and then moderate to 3.3 percent in 2024 and to 3.1 percent in 2025.

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