Positive economic outlook but Malta’s growth to slow – Fitch

Malta’s credit rating has been raised from A+ Stable to A+ Positive according to the ratings agency Fitch, but there is expectation that growth will slow down.

The announcement was made in their July report, which stated that Malta’s economy was considered the strongest with the 28 Member states. This was understood to have been underlined by the country’s 3 year sustained economic surplus by the Maltese government.

According to Fitch’s analysts, the surplus was recorded as around double the initial forecast reported, along with debt reducing and investment increasing.

They also said that Malta’s economy would remain strong however the agency also presented the probability of economic growth slowing. They state that the consistently high rates will eventually slow that currently feed into the country’s Sovereign Rating Model. However, it does predict Malta will remain above the Eurozone for growth.

In the report, Fitch says that the economy is expected to continue to grow by 5.5% in 2019 and 4.8% in 2020. The report therefore justifies the rating of A + because the government held a 2% surplus in 2018, which was higher than forecast but says that the surplus was smaller than in 2017 when it was 3.4%.

In terms of understanding the surplus, Fitch stated that this must be linked to the government’s direct investments and not to the citizenship by investment scheme. The growth of the economy was also linked to domestic demand, as well as a growing labour market and increasing wages.#

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The report also mentioned the report from the International Monetary Fund which indicated that Malta needs to improve its systems against money laundering as well as the need for increased investment in FIAU and the MFSA.

The Prime Minister welcomed the result saying, ‘#Malta awarded its highest credit rating by any agency in our history as @FitchRatings revises outlook from A+ stable to positive. Revision based on us repeatedly being fastest growing #EU economy and fiscal performance beating predictions.’