Another positive rating for the economy by international credit ratings agency, DBRS which confirmed its A level rating with stable prospects. The agency said that Malta registered an economic growth which was over three times more than the EU countries’ average, although it also observed that it has sectors which may prove problematic to sustain the growth.
DBRS economists stated that they classified the Maltese economy in A credit rating as last year the economy continued to grow with rates of 7 per cent and maintained the 2017 rhythm. The agency predicted that the economic growth will moderate both due to international factors and also as the economy almost reached its capacity.
The economists noted that the Government’s finances were assisted by the economic growth with the result that the Government again registered a budget surplus while debt decreased to 46% of the Gross Domestic Product. They added that the surplus in Government finances was achieved even without the introduction of the citizenship investment programme.
DBRS agency stated that the trend in government debt reduction will continue and observed that the regulatory changes and the justice sector will continue to improve governance in the coming years. It also attributed the rating in this high level as Malta is part of Europe and is implementing the euro zone regulations.
The economists mentioned other factors including the high rate of savings, adding that the Maltese economy is open to foreign factors due to its dependency on tourism, the financial services and gaming. They warned that changes in taxation regulations and the perception of lack of governance may negatively affect the Maltese economy as it may appear less attractive for investment. DBRS stated that other aspects which may impact on the Maltese economy future are the burdens of state enterprises and that of the pensions system.
The international economists observed that measures on the market, including the increase of woman workers, the foreign workers and more elderly persons who stay active in the labour market avoided the inflationary effects in the economy, which is also gaining from reform benefits in the energy sector. They added that Brexit, the change in taxation regulations in the E.U., the shortage of workers and the infrastructure problem may be problematic for the economy’s sustainability. They also commented on measures taken by the government to address these challenges although they said that more has to be done on expenditure on pension and health.
Referring to the banking sector, DBRS stated that local banks are conservative and their prudence provides solidity to the financial system. They further stated that the increase of measures and initiatives undertaken against money laundering have to continue so that no further damage is made to the country’s reputation.