Fitch upgrades Malta’s economic rating outlook to positive

Credit rating agency Fitch has upgraded Malta’s outlook upgrade from ‘stable’ to ‘positive’, while also reaffirming its sovereign credit rating at ‘A+’. 

The upgrade was attributed to the island’s robust economic growth, positively noting that in 2018, it was the fastest growing economy in the European Union (EU). 

“The fiscal surplus recorded in the last three years coupled with a falling debt-to-GDP ratio were also key drivers for this upgrade,” the government said in a statement. 

On what the future holds, Fitch expects an increasing surplus in the next two years, despite the forecasted decline in revenue from the IIP. 

The falling debt-to-GDP ratio is also expected to continue. 

Domestic demand is expected to be the made driver of real GDP growth, fuelled by strong labour market dynamics, Fitch stated. 

A modest wage growth will be able to boost disposable incomes, while supporting household consumption growth. 

“Fitch expects investment activity to remain high, supported by the absorption of EU structural funds,” the government said. 

Commenting on the external sector, Fitch noted that despite the slowdown in the Eurozone, the current Maltese account remained strong, while also expecting a continuation of healthy surpluses in the coming years. 

“Fitch acknowledges Government’s efforts to strengthen supervisory and regulatory institutions, noting that supervisory resources at both the FIAU and MFSA are increasing, with budget and hiring staff being prioritised,” the statement exclaimed.