VALLETTA – Malta’s gross domestic product (GDP) is projected to grow by 6.8 percent in 2022, an upward revision of 1.6 percentage points, according to the latest forecast released by the Central Bank of Malta (CBM) .
The central bank, however, revised GDP growth in 2023 downward by 0.8 percentage points to 3.7 percent.
The projected GDP growth in 2024 and 2025 will be at 3.6 percent and 3.5 percent, respectively.
“The upward revision in 2022 reflects outcomes in the first half of the year which point to more dynamic economic activity than previously envisaged. The positive surprise was primarily driven by stronger than expected growth in exports and private consumption,” said the CBM.
This faster recovery leads to a downward reassessment in GDP growth for 2023 and, to a much lesser extent in 2024, the bank added. “This is also driven by a deterioration in the international environment and the effects of high inflation.”
It said that in 2022, both domestic demand and net exports were expected to contribute significantly to GDP growth, owing to relatively strong exports and private consumption growth.
As for the annual inflation, based on the Harmonised Index of Consumer Prices (HICP), the CBM forecast that it would accelerate to 6.1 percent in 2022, up from 0.7 percent in 2021, and remain high also in 2023 at about 4.5 percent, and then decline to 2.3 percent in 2024 and 2 percent in 2025.
When compared with the CBM’s August forecasts, the overall HICP inflation has been revised up by 0.2 percentage point in 2022, 0.6 percentage point in 2023, and 0.2 percentage point in 2024.
The upward revision in 2022 partly reflects slightly stronger than projected inflation outcomes in recent months, as well as higher pressures from international commodity prices, and revisions in the following two years also reflect higher persistence in imported inflation as well as the envisaged pick-up in wages, according to the CBM.
|The unemployment rate is projected to decline to 3 percent in 2022 from 3.5 percent last year. The rate is forecast to stand at 3.2 percent in 2024 and 3.3 percent in 2025.
“The labor market is expected to remain tight over the projection horizon,” the CBM said. “This year’s pick-up reflects the continued strong demand for labor in the context of historically high labor shortages,” it added.