Malta’s economic performance throughout 2023 exceeded expectations, with growth outperforming what was initially projected, according to the most recent economic forecast published by the European Commission on Thursday.
The report found that real GDP growth stood at 6.1% in 2023. This is a drop from the “exceptional growth” of 8.1% recorded the previous year, but higher than what was projected in its previous forecast.
Previously the EC expected Malta’s GDP growth to be of 4%.
The Commission now predicts that Malta’s economy will grow by 4.6% throughout 2024, mostly driven by exports and private consumption. This will decline marginally to 4.3% in 2025, the Commission believes.
The EC attributes Malta’s performance in 2023 to several factors, from its own upward revisions of the economy’s performance at the beginning of the year, to a “high growth” of 2.4% in its third quarter.
'Weaker' construction
The EC notes construction activity was noticeably “weaker” in 2023, as was Malta’s gross fixed capital formation (namely investments in fixed assets).
The EC also predicts that inflation rates in Malta over the coming years will be slightly lower than it had initially predicted, at 2.9% this year and 2.7% next. It had originally predicted that inflation would be just over 3% for both these years.
By contrast, the report finds that inflation had reached a high of 5.6% in 2023, in line with what it had predicted.
Writing on X, Prime Minister Robert Abela said that these results are because "progressive decisions make a real difference in people’s lives".
EU economic growth slows
More broadly, the report says that the EU’s economy “entered 2024 on a weaker footing than previously expected”, saying that the cost of living crisis and a drop in households’ purchasing power has slowed the bloc’s economic growth to a crawl.
Economic activity across the EU only grew by 0.5% in 2023, marginally less than originally hoped for.
This has prompted the Commission to revise its estimates for the coming years downwards, saying that the EU’s economy will grow by 0.9% in 2024, rather than 1.3% as originally predicted.
Nonetheless, the report strikes a hopeful tone, saying that “the conditions for a gradual acceleration of economic activity this year appear to still be in place”, warning that this could be jeopardised if “protracted geopolitical tensions”, such as the conflict in the Middle East broadens.