Economic activity is not expected to grow at the same rate as in the last few years, according to the government’s estimates.
Finance Minister Edward Scicluna said the government was expecting Malta’s economy to grow by 4.3 per cent in 2020.
That GDP growth is still strong compared to the EU average of 1.4 per cent. However, the figure is the lowest estimated growth rate for years.
In 2019, the economy is predicted to expand by 5.3 per cent. Growth was 4.7 per cent in the first semester of the year, according to the Finance Minister.
The estimated GDP growth for 2020 is also less than that forecast recently by the government and the European Commission.
The long-term economic projections published by the Finance Ministry last year put GDP growth next year at 4.8 per cent. The government has now revised this projection downwards.
Minister Scicluna said global economic forecasts for next year had been reduced.
Revisions, although slight, have also been announced in public finances.
While the government was originally looking at closing 2020 with a financial surplus of 1.5 per cent of GDP, the new forecast sees the figure at 1.4 percent, based on a slower economic growth.
As a consequence, debt reduction will slow down slightly as well.
Economy: What the analysts say
“Malta’s economy remains buoyant. With growth exceeding 4 per cent and yet another government surplus, Malta’s public finances remain on solid footing. Going forward, the pace of growth is expected to moderate. The fast growth over the past few years has led to various stresses including a tight labour market and an increasing cost of living. As a result, the Government is proposing a significant cost of living adjustment; the highest since 2015. It also appears that the Budget will take a very strong distributive stance towards supporting the most vulnerable cohorts of society and the environment.”
JP Fabri, ARQ
Prof. Scicluna said debt as a percentage of the economy is next year expected to be lowered to 40.4 per cent of GDP. Originally the government was aiming at 40.2 per cent.
No new direct taxes were announced.
While making no mention of the steep increases during the year in the prices of fuel, milk and bread, the minister said the government would be giving a one-off compensation of €35 for families and €15 for single-person households, recognising the increased pressure on the purchasing power.