12/12/2016

Central Bank of Malta Macroeconomic Forecasts

The Central Bank of Malta has published its latest economic forecasts on its website.

Economic activity in Malta is expected to remain robust over the projection horizon, supported by both demand and supply factors. In particular, the energy reforms that have taken place in recent years, new investment projects, increased labour market participation and robust services exports are the primary drivers supporting the economic expansion. Real GDP growth is projected at 4.3% for 2016. It is then expected to decelerate to 4.1% in 2017, 3.7% in 2018, and 3.3% in 2019.

As a result, the labour market is projected to remain tight, with the unemployment rate falling further to 4.9% in 2016, before picking up slightly to 5.3% by 2019.

Downward international price pressures are expected to contribute towards a further easing of consumer price inflation this year. Annual inflation, based on the Harmonised Index of Consumer Prices (HICP), should ease from 1.2% in 2015 to 0.9% in 2016. It is then projected to trend up to 1.9% by 2019, reflecting a pick-up in international commodity prices and domestic cost pressures.

In terms of public finances, restraint in key expenditure variables is expected to contribute towards a decline in the general government deficit, with government finances set to become broadly in balance by 2019.

More details on the Bank's latest projections can be found here.

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