Current Affairs
Central Bank forecasts economic growth will maintain fast-paced 4.4% rhythm

The Central Bank of Malta is forecasting that the economic growth will continue at a fast pace at a 4.4% average rate between this year and 2021, sustained mainly by a healthy domestic demand.

In a detailed report about prospects for the Maltese economy, the Central Bank stated that Government is expected to continue with a financial surplus, and when economic activity moderates slightly, the pace for creation of work  will slow down slightly and the unemployment rate will remain below 4%.

The Central Bank is forecasting that the economy will grow by 4.5% this year, marginally down from the preceding forecast as a result of delays in a major investment project by the private sector.

Referring to prospects for the Maltese economy for the next two and a half years, the Central Bank stated that next year the economy is expected to grow by 4.3%, and by 3.5% in 2021. The Bank added that economic growth is motivated mainly by private consumption and Government expenditure, which are expected to remain strong, whilst for this year and the next, the export contribution is expected to be negative as a result of a weak international scenario and a higher growth rate in imports.

The Central Bank is forecasting that Government will continue to register a surplus in public finances, in a way that by 2021 the debt rate compared to the wealth generated by the Maltese economy will drop below 40%.

The rhythm of job creation is expected to moderate to below 4% next year and for the following year, but will remain strong, whilst the unemployment rate is forecast to remain stable at a level of 3.7%.

The Central Bank further stated  that annual inflation is expected to drop slightly this year (1.6%), but will go up again to 1.9% by 2021, mainly because of increases in the prices of services and industrial products.

Looking at the years after 2021, the Central Bank stated that the foreign scenario creates a number of negative risks for economic forecasts and the cost of living, but local risks including for public finance are generally balanced, and delays in the implementation of investment projects can be overcome through an increase in expenditure.

 

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