Malta Economic Outlook

June 2, 2020

The impact of the coronavirus pandemic severely hampered economic activity in the first quarter, with GDP growth slowing to 0.5% year-on-year (Q4 2019: +4.8% yoy), an over one-decade low. The deceleration was largely driven by falling exports as the important tourism sector was hammered by lockdowns abroad, while social distancing measures at home crippled private consumption. A pick-up in public expenditure growth cushioned the overall downturn, however. Turning to the second quarter, the scenario has seemingly deteriorated further as containment measures continued to depress domestic demand, while travel restriction has halted tourism. However, since 4 May restrictions are gradually being lifted to reboot the economy, allowing some businesses and shops to reopen as of 22 May.

Malta Economic Growth

GDP is expected to shrink this year as Covid-19 and its associated containment measures deals a heavy blow to the economy. Household spending and fixed investment are set to fall markedly, while global lockdowns will depress the tourism sector, which accounts for over 17% of GDP. Fiscal and monetary stimulus should provide some support, however. FocusEconomics panelists estimate GDP to contract 4.0% in 2020, which is down 0.5 percentage points from last month’s forecast, before expanding 7.3% in 2021.

Malta Economy Data

	2015	2016	2017	2018	2019
Population (million)	0.4	0.5	0.5	0.5	0.5
GDP per capita (USD)	24,500	25,556	27,783	30,546	30,536
GDP per capita (EUR)	21,948	23,044	24,613	26,057	27,375
GDP (USD bn)	10.8	11.5	12.8	14.5	14.8
GDP (EUR bn)	9.7	10.4	11.3	12.4	13.3
Economic Growth (GDP, annual variation in %)	10.9	5.8	6.5	7.3	4.7
Consumption (annual variation in %)	5.0	2.6	3.3	7.8	2.9
Investment (annual variation in %)	55.6	-0.2	-7.1	-1.8	6.2
Exports (G&S, annual variation in %)	15.5	4.5	4.8	3.4	2.5
Imports (G&S, annual variation in %)	18.1	1.6	-0.5	3.0	3.0
Industrial Production (annual variation in %)	-0.2	-6.9	8.3	1.6	1.7
Unemployment Rate	5.4	4.7	4.0	3.7	3.4
Fiscal Balance (% of GDP)	-1.0	1.0	3.3	1.9	0.5
Public Debt (% of GDP)	58.0	55.5	50.3	45.6	43.1
Inflation Rate (HICP, annual variation in %, eop)	1.2	1.0	1.3	1.2	1.3
Inflation Rate (HICP, annual variation in %)	1.2	0.9	1.3	1.7	1.5
Inflation (PPI, annual variation in %)	-	-	-	-	-
Policy Interest Rate (%)	-	-	-	-	-
Exchange Rate (vs USD)	-	-	-	-	-
Exchange Rate (vs USD, aop)	-	-	-	-	-
Current Account (% of GDP)	3.6	6.3	12.3	10.6	10.5
Current Account Balance (EUR bn)	0.3	0.4	1.2	1.4	1.3
Trade Balance (EUR billion)	-2.0	-2.0	-1.5	-1.4	-1.6

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Malta Facts

	Value	Change	Date
Bond Yield	0.43	3.09 %	Dec 30
Exchange Rate	1.12	0.65 %	Dec 31

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