Malta’s GDP growth is being forecast by the European Commission to be 4.6 per cent this year – nearly three times that of the eurozone.
The Spring 2017 Economic Forecast released today said Malta would also see more growth in 2018, although at a slightly slower rate of 4.4 per cent.
Although the Commission did not anticipate that the unemployment rate would change much from its current level just below five per cent, jobs would increase by 2.9 per cent between 2017 and 2018.
The launch of the Malta Development Bank could provide an additional boost to investment.
The rise in international commodity prices would eventually work its way into local prices, bringing them gradually higher, it warned.
Looking at what could drive further growth, the Commission also mentioned the launch of the Malta Development Bank, saying it could provide an additional boost to investment.
“The decision to increase the minimum wage may support private consumption further, although the impact on GDP growth could be offset by higher costs for employers,” it added when analysing the possible risks.
“The negotiations between the UK and the EU, which are still shrouded in considerable uncertainty, may also be set to impact Malta’s growth prospects.”
The Commission also commented on the government’s finances, saying that the surplus was explained by the high growth of current revenue.
Looking at the European economy as a whole, the report said that the EU has entered its fifth year of recovery, and growth was expected to continue at a largely steady pace this year and next.
It expects eurozone GDP growth of 1.7 per cent in 2017 and 1.8 per cent in 2018 (1.6 per cent and 1.8 per cent in the Winter Forecast). GDP growth in the EU as a whole is expected to remain constant at 1.9 per cent in both years (1.8 per cent in both years in the Winter Forecast).
"Today's economic forecast shows that growth in the EU is gaining strength and unemployment is continuing to decline. Yet the picture is very different from member state to member state, with better performance recorded in the economies that have implemented more ambitious structural reforms,” Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, said.
“To redress the balance, we need decisive reforms across Europe from opening up our products and services markets to modernising labour market and welfare systems. In an era of demographic and technological change, our economies have to evolve too, offering more opportunities and a better standard of living for our population."
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