Malta to top economic growth charts until 2027, according to EU report
Report paints a rosy picture of Malta's economic performance but warns of expenditure increases
Malta’s economy is set to grow by 3.7% this year, the highest rate in Europe, according to the European Commission’s spring forecast, published on Thursday.
The EC’s report assesses the economic situation of the EU’s 27 member states, painting a rosy picture of Malta’s economic performance and employment prospects.
GDP growth will dip marginally in real terms, from last year’s 4% to 3.7% in 2026 and 3.6% next year, the report says. Despite the dip, Malta is set to register the largest economic growth across the bloc in both years, with the EU average at 1.1% for 2026 and 1.4% for 2027.
Malta’s strong economic growth “is rooted in its strong services sector,” the EC said, with tourism having “outperformed expectations in 2025”. Tourism will remain strong this year, despite the global geopolitical uncertainty, the report says.
Malta also ranks ahead of other EU countries when it comes to employment growth, registering a 3.9% in 2025. While employment growth is likely to slow down over the coming years, “the unemployment rate is expected to remain very low at 3%”.
Nevertheless, Malta is flagged as one of the countries which registered a “relatively large unemployment increase" between mid-2025 and early 2026, with a 0.6 percentage point increase.
Inflation is also likely to pick up slightly, growing to 2.7% in 2026, driven by the rise in international energy prices. According to the EC, the impacts of these changes will be “neutralised” by the government’s decision to freeze energy prices for consumers through subsidies.
More broadly, Malta’s fiscal results remain strong, the report says, with both deficit and debt set to remain well within the EU’s thresholds for the coming years.
Deficit has dipped from 3.4% in 2024 to 2.2% the following year, a result of “strong government revenue growth” brought about by the increase in GDP and greater tax collection efforts.
Nevertheless, government expenditure is on the rise, with the report flagging “substantial increases in the government’s wage bill,” together with a “one-off” court ruling awarding National Bank shareholders €71 million in compensation.
Tax revenue is likely to dip in the coming years, as the government’s tax cuts in last October’s budget come into play, while the government’s expenditure set to rise as the cost of energy subsidies rises.
However, the country’s fiscal deficit will remain stable, dipping slightly to 2.1% in 2027.
Likewise, the debt-to-GDP ratio will settle around the 46% mark over the coming years, the report says.
Reacting to the report, Prime Minister Robert Abela said “the European Commission’s opinion speaks for itself,” pointing to its forecast for the country’s rising growth in the face of geopolitical uncertainty.