The European Commission is expecting the Maltese economy to continue to grow in 2020 and 2021 at the fastest pace amongst its EU peers, on the back of investment growth and the completion of important public projects. However, such growth will continue to moderate from the dizzy heights of 2018, when real GDP growth touched 7%, to 4% in 2020 and 3.7% by 2021.
In its Winter Forecast for Malta, which reflects a slight downward trend in economic growth projections since the last indicators published in Autumn, Brussels noted that domestic demand remained the key source behind growth throughout 2019, supported by public consumption and investment. While the economy in general continued to grow at a significant pace reaching 4.5%, the services and construction sectors reported drops in confidence.
Throughout this year and next, private consumption and public expenditure are set to moderate, reflecting a slowdown in job creation. This should be partly offset by an improvement in exports, which should rebound if the expected improvements in the external environment materialize.
Turning on the cost of living, despite a significant rise in food prices, particularly in the first six months of last year, inflation declined to 1.5%, and the European Commission expects no significant changes in this regard over the next couple of years.