International agency, Creditreform Rating confirmed Malta’s A+ rating, although it revised the Maltese economy’s prospects from positive to stable in the wake of the uncertainty of economic growth and in Government finances due to the Covid-19 pandemic. The agency’s economists said that if restrictions on economic activity are removed, the Maltese economy starts recovering from the second half of this year.
Creditreform Rating economists expressed their confidence that the Maltese economy will recover from the pandemic’s effects and predict that if Covid-19 imposed restrictions are removed, the Maltese economy starts recovering from the second half of the year, although they said that uncertainties remain for medium and long term period due to the global economy. While they confirmed the rating at A plus level, they revised the Maltese economy prospects from positive to stable.
They added that the government’s measures to alleviate the pandemic effect, both for businesses and for families, are mitigating the crisis effects although these will be reflected in greater debt for the Government. However they noted that Malta had a low debt rate and therefore can afford to make loans.
The agency economists’ concern is that the Maltese economy is open and depends on the global economy, including in tourism and manufacturing which will be affected by the situation in other countries that will reflect themselves on the domestic consumption and the economic activity. The agency predicts that this year, instead of a surplus the Government will register an 8% deficit resulting from less revenue from taxes and also because the Government launched schemes for workers and businesses which will increase the Government’s expenditure. It added that the Maltese Government’s measures package will reach almost 14% of the Gross Domestic Product.
While it praised the government’s measure to alleviate this crisis, the agency predicts that after many years, the Maltese economy will register a 5.5% reduction this year although it expects that by next year, the Maltese economy will again grow by 4.8% once the pandemic eases.
The economists stated that tourism indicators already show that the industry in Malta suffered a great blow, on the other hand they said that other sectors of the economy, including gaming, will continue to generate wealth for the country. They also predict a temporary increase in unemployment while the closing of schools will negatively affect the labour market. Creditreform Rating says that government projects will compensate slightly to the reduction in economic rhythm.