European Commission projects local economy will remain strong

In its Spring Forecast, issued on Tuesday 5th May, the European Commission projects Malta’s economic performance to remain robust with a favourable macroeconomic outlook and a further decline in the budget deficit.

The forecast recognises that the deficit targets of 2.7% and 2.1% for both 2013 and 2014 respectively, were met and expects the deficit to continue declining to 1.8% in 2015 and 1.5% in 2016.

“Malta’s economic growth in the final quarter of the year marked the highest growth rate in the last 4 years. Robust growth in private consumption, stronger investment and Government expenditure in productive sectors were the main contributors behind the robust growth attained in 2014,” a statement issued by the government reads.

The Commission said that it expects the main drivers of growth to be investment in a number of large-scale construction and energy projects as well as private consumption, reflecting an increase in disposable incomes and favourable consumer sentiment, as well as a substantial increase in EU funds absorption, particularly in 2015.

The Commission also expects falling interest rates to ease access to finance for firms, bringing about a reduction in the cost of financing for micro and small enterprises.

“Job creation and the unemployment rate are expected to outperform euro-area peers and the Commission expects the dynamic job creation to continue to contribute to the increased level of economic activity in Malta,” the statement continues.

“Very pleased that the Commission acknowledges investment to be the main driver behind Malta’s economic growth,” said Minister for Finance, Edward Scicluna.

Scicluna added that economic stability, brought about by good fiscal governance, is what has attracted and will continue to attract this investment.