EC forecasts Malta with 3rd lowest negative growth rate in euro area

Shops in Valletta empty due to coronavirus
Miguela Xuereb

Tista' taqra bil- Malti.

The European Commission forecasts the Maltese economy to grow by 6.0% in 2021 after contracting by 5.8% this year. Furthermore, Malta’s negative growth rate this year is expected to be the third lowest in the Euro Area.

This economic forecast better known as the Spring Economic Forecast was issued by the European Commission (EC).

In a statement issued by the Ministry for Finance and Financial Services, Minister Edward Scicluna said the government welcomes this economic forecast which corroborates the Government’s own macroeconomic forecasts in expecting economic growth in 2020 to recover the lost ground during this year.

Cushioning the crisis’ impact on consumption is the dynamic performance in the labour market in 2019, where unemployment was at a record low and employment growth was amongst the highest, together with the households’ high saving rate.

Malta is also forecasted to record the third lowest unemployment rate in the Euro Area at 5.9% this year but will be expected to fall to 4.4% in 2021.

The inflation rate is expected to fall below 1% this year and remain close to 1% next year.

According to the Spring Economic forecast he general government balance is expected to recover strongly in 2021 while the Government debt-to-GDP ratio is forecast to remain below the 60% debt-to-GDP EU threshold and close to 50%

On external trade, the Spring Economic Forecast expects the current account surplus, which peaked in 2017, to gradually narrow but will remain high.