The Ministry for Finance and Financial Services welcomes the Spring Economic Forecast 2020 published by the European Commission (EC) which corroborates the Government's own macroeconomic forecasts in expecting economic growth in 2020 to recover the lost ground this year. Indeed, the EC forecast the Maltese economy to grow by 6.0 per cent in 2021 after contracting by 5.8 per cent in 2020.
Furthermore, Malta's negative growth rate this year is expected to be third lowest in the Euro Area. Cushioning the crisis' impact on consumption is the dynamic performance in the labour market in 2019, where unemployment was at a record low and employment growth was amongst the highest, together with the households' high saving rate.
Malta is also forecasted to record the third lowest unemployment rate in the Euro Area at 5.9 percent this year, but will be expected to fall to 4.4 per cent in 2021. The inflation rate is expected to fall below 1 per cent in 2020 and remain close to 1 per cent next year.
The general Government balance is expected to recover strongly in 2021 while the Government debtto-GDP ratio is forecast to remain below the 60 per cent debt-to-GDP EU threshold and close to 50 per cent.
On external trade, the Spring Economic Forecast expects the current account surplus, which peaked in 2017, to gradually narrow over the forecast horizon, but to remain high.
"I am pleased to note that the European Commission's forecast corroborates both our own outlook and those of the other international institutions' and credit rating agencies. Malta has provided a number of economic shock absorbers which are expected to stand up well during this crises and help the economy to recover quickly and return to strong growth next year," commented Minister for Finance and Financial Services Edward Scicluna.
Originally published 7th May 2020
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