The Central Bank has revised its economic growth projection marginally upwards for this year, but it still expects growth to drop by two percentage points from last year.

"According to the Bank’s latest forecasts, Malta’s real GDP growth should ease from 6.0% in 2024, to 4.0% in 2025. Growth is set to moderate further in the following two years, reaching 3.3% in 2027," the bank said.

"Compared to the Bank’s previous projections, GDP growth is being revised up by 0.1 percentage points in 2025 and is revised down by 0.1 percentage points in 2027. The marginal upward revision in GDP growth in 2025 reflects a higher contribution from both domestic demand and net exports. The downward revision in 2027 is driven by net exports."

The Central Bank's economic projections.

The bank said economic activity in Malta was relatively buoyant during 2024 and remains strong despite the uncertain external environment. Indeed, the Bank’s Business Conditions Index recently stood close to but above its historical average.

Nevertheless, economic growth was expected to moderate from the very high rates experienced in the last four years, broadly converging to potential output growth by the end of the projection horizon.

Inflation is expected to remain stable around the ECB’s inflation target. This, together with the recently enacted widening of the income tax bands, would boost real disposable income growth, which should remain robust and support private consumption.