Moody’s Agency has classified Malta at Level A2 with stable prospects. The Credit Agency’s economists expressed great praise on the implementation of Constitutional and Institutional reforms based on the Venice Commission’s recommendations and approved by Parliament in July. They also stated that had not the pandemic occurred, the country’s economy would have grown in a sustainable manner and the rating would have been better. However, they warned that Covid may weaken the economy if this adversely affects the tourism industry.
Although Institutional concerns remain on the Rule of Law, the control of corruption and proper monitoring supervision of money laundering, the reforms implemented show the will of Prime Minister Robert Abela to address problems in the country’s Institutions.
While classifying economic outlook at A2 Level with stable prospects, Moody’s stated that Malta’s economic profile balances between the small size of the economy, the growth progress of the economy and the wealth generated in recent years.
It was stated that although between 2011 and 2019 the balance between National Debt and economic growth had reduced, the pandemic may lead to disrupt economic growth forecast for this year, particularly because of the significant pandemic impact on the tourism market. The Agency said they expected the impact of Covid on the economy should be limited and Malta should return to economic growth next year.
Moody’s forecast that this year the economy will shrink by 6.9% in its Gross Domestic Product because of the pandemic’s impact but Malta is expected to recover next year and register a 3.9% economic growth.
As a result of the emergency measures taken to limit the pandemic spread, the Agency forecast that this year the Government will have a record 10.3% deficit after years of achieving a surplus while National Debt proportionately compared to economic wealth will increase to about 56.6%.