The European Commission predicts that Malta will see a 1.8% rise in wages, a government statement read, stating that this information came out of the Autumn Economic Forecast.
“The report by the commission confirms that Malta is living a success, with record employment numbers, increases in wages higher than the rest of the EU, and strong investment.”
The forecast indicates that in 2018, the country’s economy will increase by 5.4%, government said.
Government also said that Malta willhave the largest increase in employment in the EU, with 5%. It also notes that the rate of inflation in Malta for this year will be 1.8%, and that Malta is expected to have the second highest surplus in the eurozone.
The European Commission, in its own statement about the economic forecast, says that growth in the euro area is forecast to ease from a 10-year high of 2.4% in 2017 to 2.1% in 2018 before moderating further to 1.9% in 2019 and 1.7% in 2020.
“The same pattern is expected for the EU27, with growth forecast at 2.2% in 2018, 2.0% in 2019 and 1.9% in 2020.”
“Last year's exceptionally benign global situation helped to underpin strong economic activity and investment in the EU and euro area. Despite a more uncertain environment, all Member States are forecast to continue growing, though at a slower pace, thanks to the strength of domestic consumption and investment. Barring major shocks, Europe should be able to sustain above-potential economic growth, robust job creation and falling unemployment. However, this baseline scenario is subject to a growing number of interconnected downside risks.”
Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, said: "All EU economies are set to grow this year and next, which will bring more jobs. However, uncertainty and risks, both external and internal, are on the rise and start to take a toll on the pace of economic activity. We need to stay vigilant and work harder to reinforce the resilience of our economies. At EU level, it means taking concrete decisions on further strengthening our Economic and Monetary Union. At national level, there is even a stronger case for building up fiscal buffers and reducing debt while making sure that the benefits of growth are also felt by the most vulnerable members of society."
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: ‘“The European economy is holding up well, with growth easing gradually. We project this pattern will continue over the next two years, as unemployment continues to fall to levels not seen since before the crisis. Public debt in the euro area is set to continue declining, with the deficit remaining well below 1% of GDP. In an increasingly uncertain international environment, policy-makers both in Brussels and in national capitals must work to ensure that the euro area is strong enough to deal with whatever the future might hold.”
Domestic demand to drive growth
Rising global uncertainty, international trade tensions and higher oil prices will have a dampening effect on growth in Europe, the Commission said. “Following years of robust employment growth, the prospect of a slowdown in labour market improvements and of increasing supply side constraints in some Member States could also add to this dampening effect. The drivers of growth are set to become increasingly domestic: private consumption should benefit from stronger wage growth and fiscal measures in some Member States. Financing conditions and high rates of capacity utilisation are also expected to remain supportive of investment. For the first time since 2007, investment is expected to increase in all Member States in 2019.”
“Taking all of these factors into account, gross domestic product (GDP) in all Member States should continue to grow but the pace is set to slow and appears somewhat weaker than expected in the summer.”
Inflation driven by oil prices
Headline inflation is forecast to remain moderate over the forecast period. In the euro area, inflation is set to reach 1.8% in 2018 and 2019 and to slow to 1.6% in 2020, the Commission explained.
“The rise in oil prices has pushed up inflation this year and strong positive base effects are expected to continue into the first quarter of next year. While core inflation, which excludes energy and unprocessed food prices, has been relatively muted so far this year, it is expected to reassert itself as the main driver of headline inflation in 2020, as wages rise amid tightening labour markets.”