Malta’s Economy is set to have the most rapid growth in 2024 among all EU countries

Malta is anticipated to lead economic growth among EU countries this year and the next, as per the recently issued European Commission's Autumn 2023 Economic Forecast. The European Commission projects a GDP growth rate of 4% for Malta, positioned considerably higher than Belgium and Ireland at around 3%.

Despite facing higher inflation, private consumption has already experienced a notable growth of 5.2% in the initial half of 2023, and there is no anticipation of a subsequent deceleration, given the sustained positive trajectory of retail sales growth. The tourism sector exhibited a robust rebound that surpassed pre-pandemic levels and promising growth prospects extend into 2024 and 2025. The GDP growth is expected to moderate from the 6.9% reached in 2022 to 4.0% this year and maintain a similar trajectory in 2024, accelerating slightly to 4.2% in 2025.

A slight deceleration in private consumption has been noted, primarily attributable to the extraordinary expansion in 2022 linked to aircraft acquisitions, leading to a corresponding decline in imports. Insights from key industries indicate a further recovery in exports. In 2023, net exports are poised to be the principal contributor to GDP growth, while consumption is projected to drive the economy in 2024 and 2025. 

Even though the government have implemented measures to hold the local energy prices steady until 2025, inflation is yet projected to reach 5.7% in 2023, gradually moderating to 3.3% in 2024 and 3.1% in 2025. The general government deficit is anticipated to decrease from 5.7% of GDP recorded in 2022 to a downward reaching 4.1% in 2025. The public debt is expected to reach 57% of GDP by 2025.

Malta is expected to sustain a robust pace of employment and population growth, driving consumption despite a projected weak recovery in real wages. Employment grew by 6.2% in 2022, particularly in tourism and administrative services. This growth was fueled by substantial labor demand across all sectors of the economy, both public and private, with notable strength observed in the tourism and administrative services sectors. The labour force is set to continue expanding in 2024 and 2025, aligning with population growth as the country continues to attract foreign workers. Malta's unemployment rate declined to 2.9% in 2022 and is anticipated to further decrease to 2.7% in 2023, 2024, and 2025.

The European Commission reported that the strong post-pandemic expansion in the EU witnessed in 2021 and 2022 has encountered a slowdown. Real GDP experienced a mild contraction in the fourth quarter of 2022 and demonstrated minimal growth in the initial three quarters of the current year. The impact of a high cost of living surpassed initial expectations, while global trade offered limited support externally. Monetary policy responses to elevated inflation are gradually affecting the economy, and fiscal support is being phased out to some extent.

The Ccommission's projections indicate a 0.6% GDP growth for both the EU and the euro area in 2023, yet Malta’s GDP growth remains robust with an expected growth of 4% in 2023.

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