Malta

The post-Covid GDP rebound was strong both in 2021 and 2022 (+11.8% and +6.9%, respectively), despite the economic consequences of the Russian invasion of Ukraine.  Malta's economy showed strong growth in both private and public consumption, as well as in investment. Exports of services rebounded quickly in 2022, thanks to strong tourism activity, both in terms of the total number of visitors and tourism expenditures. However, GDP growth is expected to slow down (despite remaining well above Eurozone average) to +1.7% in 2023, and then to +0.9% in 2024.

Annual inflation reached 6.1% in 2022 after years of low-price dynamics. Inflation is likely to have peaked in the fourth quarter of 2022 and we expect it to decrease gradually to around 4.2% in 2023 and 1.9% in 2024, helped by the expected moderation in global inflation and the fixing of domestic energy prices by the administration.

The general government-deficit-to-GDP ratio is estimated to have declined to 5.2% of GDP in 2022, from 7.5% in 2021. We also expect the government balance to narrow further in 2023 and 2024, mainly driven by a declining share of expenditure in GDP, especially following the unwinding of Covid-19 support measures in 2022 and the declining magnitude of inflation-mitigation measures. The general government-debt ratio is estimated to have decreased in 2022. It is likely to increase progressively over the next couple of years, remaining just below 60%.

Fiscal support to shield households and firms from higher energy prices reached nearly 7% of GDP. The government has mandated Enemalta, the (67%) state-owned energy provider in the country, to freeze prices at their 2014 level while compensating the firm for the losses implied by the price cap due to the increasing cost of energy imports.

Malta was in the bottom of the first half of the 2020 World Bank Doing Business ranking: 88th out of 190 economies. The country achieved top rankings in enforcing contracts, trading across borders and protecting minority investors. In 2020, the country improved the reliability of its electricity supply by upgrading its grid and setting up a grid operations-control center.

In January 2020, then prime minister Joseph Muscat stepped down as members of his government and staff were implicated in the murder of an investigative journalist. He has since been replaced by Robert Abela. The Labour Party that has been ruling the country since 2013 won the general election in June 2022. However, the government will continue to face challenges, including concerns over good governance, criticism over the "golden passport" scheme, the rising cost of living and high energy prices.