The Central Bank of Malta published its August economic update, showing that along the first quarter of 2015, Malta experienced a strong economic growth with a GDP increase of 4.0% over a period of one year. Growth was driven by net exports as domestic demand declined.
As unemployment rates have decreased to a record low, positive economic activity is being experienced on the labour market due to increased employment. The manufacturing and tourism industries are also expecting further expansion.
The Harmonised Index of Consumer Prices shows an annual inflation rate of around 1.2% in July. According to a recent report published by credit ratings agency Fitch, inflation rate is expected to grow to around 2% in 2016/2017.
Government deficit grew during the first quarter of 2015, however during the first six months of this year, deficit on the Consolidated Fund decreased when compared to the same period in 2014. On the same note, Fitch affirmed Malta's 'A' rating due to its stable economic outlook.
An improved track record in public finance leading to lower government debt/GDP along with a considerable decline in contingent liabilities are among the key factors that can further improve Malta's position. At the same time, Malta needs to watch out against slippages from its budgetary targets as these can negatively affect its economic outlook.
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