Malta is projected to have the highest economic growth rate across the EU by the end of the year.
In its winter economic forecasts, the European Commission predicts Malta’s economic growth for 2022 will reach a chart-topping 6% of GDP.
This is two percentage points higher than the average projected growth of 4% for the entire EU.
The EU as a whole reached its pre-pandemic level of GDP in the third quarter of 2021 and all member states are projected to have passed this milestone by the end of 2022.
Growth continues to be shaped by the pandemic, with many EU countries under pressure from a combination of increased strain on healthcare systems and staff shortages due to illness, precautionary quarantines or care duties.
Prime Minister Robert Abela welcomed the news in a tweet, also adding that inflation is expected to be the lowest in the EU.
The EU forecast says Malta is expected to reach pre-pandemic levels of economic activity around mid-2022.
It said that growth was estimated to have been negative in the last quarter of 2021 and to "remain muted" in the first quarter of this year due to "the surge in infections in late 2021, the tightening of restrictions, low tourist numbers, continued disruptions in global value chains and negative effects of price increases in shipping and transport".
Growth is expected to pick up in the course of this year as domestic demand recovers and is supported by the implementation of the EU-funded post-pandemic Recovery and Resilience Plan.
It however warned that a "limited downside risk" remains related to possible consequences of the FATF’s decision to grey list Malta last year.
The commission said relative to the EU average, inflation in Malta increased only moderately in 2021.
It noted how the government has expressed a commitment to continue to limit energy price growth in 2022.
After increasing to 2.1% in 2022, inflation is expected to be at 1.9% in 2023 it said.
The interim reported also flagged Malta as one of the countries most impacted by labour shortages affected the services sector.
In the EU's business surveys carried out in January, supply-side bottlenecks continued to aggravate the economy.
Shortages of material and equipment were particularly severe in manufacturing while services were mainly affected by shortage of labour
"The services’ sector was affected by big labour shortages in Malta, Ireland and the Netherlands," it said.