A German credit rating agency has classified Malta in A+ rating level with stable prospects after its economists carried out an evaluation of Malta’s economic and financial indicators.
The agency, Creditreform, considered in the A+ level rating to Malta the strong economic growth which increased the average income and the low rate of unemployment. The economists stated that this scenery is expected to continue even next year and noted that the Government is registering the highest surplus in the budget among European countries with a trend of debt reduction.
In a twelve-page report, the German agency noted that Malta has a sound institutional framework, however they remarked that there is room for improvement in the judiciary system and the strengthening of measures against corruption and money laundering. The report observes that in the World Bank index Malta classified in the 41 position among 209 countries on good governance. They added that this classification is in the level of countries who have the same rating of Malta. On the other hand, Malta fairs better than these countries in the perception of how much it favours the private sector.
Regarding the rule of law, corruption control, the judiciary independence and auditing, the report is less positive to remark that in classifications of other organisations, Malta’s points were slightly lower since 2008, and also mentions the European Parliament’s report on Malta, among others, on transparency, citizenship with investment programme and data protection. However, the report observes that the Maltese authorities, including MFSA and FIAU already took various actions in the fight against money laundering and greater control by regulators in the financial services sector. It says that one has to see how effective these measures will be.
On the economic factors, the economists considered the risks that the Maltese economy may face due to international developments, including in tax harmonization and action that may affect the income from the citizenship programme. They stated that generally the economic indicators justify Malta’s A+ rating classification as, since 2013, it consistently registered an increase in national wealth and even in the personal income which was achieved with a faster rate than the rest of the 27 EU member states.
The economists described Malta’s economic growth of 6.8% as exceptional and far higher than the EU’s average rate. They also noted that economic expansion was felt almost in all sectors, from services up to construction.
Creditreform further stated that in this scenery the prospects for the Maltese economy are positive and predicted an economic growth of 5.5% this year and 5% during 2019. While reviewing figures of various sectors of the economy, the economists noted among others the strong increase in tourism and even improvement in manufacturing, and an increase in planned investment through EU funds. On the labour market, they observed that foreign workers were an important factor against the creation of wages inflation and, together with an increase in productivity, it improved competitiveness in various sectors of the Maltese economy. However, they remarked that Malta still has bureaucracy which obstructs enterprises and was classified in the 84th position among 190 countries in another report.
The German credit agency stated that the risks of no agreement on the UK’s exit from the EU were slightly reduced, however it warned that if the agreement is not approved by the British Parliament, it may negatively affect tourism to Malta from the British market, although it noted that the Maltese tourism industry no longer depends only on British tourists. On the other hand, Malta may benefit also from financial services companies who chose to operate from Malta following the UK’s exit from the EU.