The European Commission's latest macroeconomic forecast for Malta's economy projects to maintain strong growth through 2025 and 2026, following a robust 6.0% increase in GDP in 2024. Growth rates are expected to moderate but remain healthy, with forecasts of 4.1% in 2025 and 4.0% in 2026. This positive outlook is underpinned by strong domestic demand and favourable net exports, particularly from the tourism and services sectors.
Growth Drivers
The surge in GDP in 2024 was fuelled by both private and public consumption, as well as a positive contribution from net exports. Tourism and financial services played a significant role, with tourist spending rising by 23.1% compared to 2023, surpassing pre-pandemic levels. Other service sectors, such as recreation, IT, and professional services, also contributed to growth. Investment rebounded by 2.4% in 2024 and is expected to continue growing.
Labour Market Trends
Employment increased by 5.1% in 2024. Job growth is expected to slow to 3.1% in 2025 and 2.8% in 2026, aligning with pre-pandemic trends. The unemployment rate is forecast to remain low at 3.1% for both 2025 and 2026. Wage growth is set to outpace inflation, with nominal wages rising by 4.1% in 2025 and 3.5% in 2026.
Fiscal Developments
The deficit narrowed to 3.7% of GDP in 2024, mainly due to increased tax revenues and improved collection, and is projected to fall to 3.2% in 2025 and further to 2.8% in 2026, as capital expenditures decline and subsidies decrease as a share of GDP. Social spending is also expected to drop slightly, while income tax revenues may decrease due to tax bracket reforms. The public debt-to-GDP ratio is expected to remain stable, staying below 48% throughout the forecast period.
External Environment and Resilience
Malta's economy is relatively insulated from global trade shocks, particularly in goods, and the current account balance is forecast to remain positive, supported by strong services exports.
In summary, Malta's economy is set to continue its strong performance, with solid growth, a resilient labour market. For more details, please refer to the European Commission's Economic Forecast for Malta.
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