The Central Bank has taken a bullish stance towards Malta's economy, revising its GDP growth forecasts upwards and saying overall risks to economic growth in 2025 are tilted to the upside.
It expects Malta's economic growth to be largely fuelled by an increase in domestic demand and gradual recovery in private investment. Net exports will also contribute to growth, though less than domestic demand. Inflation risks are also slightly tilted to the upside, the central bank said: geopolitical and global trade issues could all create supply-side bottlenecks that fuel inflation, wage pressures could be stronger than expected and unfavourable weather conditions, as well as some policies supporting the green transition, could also push up inflation.
There is a general consensus that Maltese households and businesses did fare relatively well in 2024; certainly this was the sentiment expressed by the Labour government speakers at the 50th anniversary of Republic Day. In her speech, her excellency the President, stated inter alia, how Malta's international reputation is in a strong place, something seen especially in how the island was trusted by 57 countries to lead the OSCE and to be on the United Nations Security Council.
One lauds the high security services during the OSCE Ministerial Council meeting which took place in Malta - this was the biggest ministerial conference ever held in the country. More plaudits go to the President of the European Parliament and Maltese MEP Roberta Metsola. She was featured during Google's 2024 Year in Search, which is an honour for one of our own citizens.
President Metsola got elected with a record number of votes in Malta and Gozo, being re-elected as President of the European Parliament, obtaining 90% of the votes cast. This apart from another five MEPs in Brussels who place Malta high on their agenda. All the while, there is a healthy prognosis that we shall exceed EU economic targets with GDP growth to reach 4.9% at constant prices in 2024.
One congratulates Finance Minister Clyde Caruana as a dignified economist announcing a generous budget, which inter alia, aims to help a low-income stratum of society, to nurture young families and lift up pensioners' lot in fighting the cost of living. In his budget speech, he stressed Malta's economy aims for its next leap forward in terms of quality, to start producing more clean energy by harnessing natural resources like wind and solar power.
Many sustain a common perception that commercial banks are brimming with idle cash yet, as a general rule, give a hard time when approached to lend depositors' money. This is true, however, as a result of Malta's FATF grey-listing in 2021, banks had taken a cautionary approach and decreased their risk appetite, particularly in areas where they lacked sufficient knowledge of proposed business lines or activities.
Malta's swift removal from the Grey List in 2022 has since leveraged expectations that banks return to their previous stance and become more approachable. Moving on, we note with satisfaction, a projected compilation by foreign experts of a Malta Vision 2050. This move is described as quite promising by the ADPD - The Green Party chairperson Sandra Gauci.
On the downside, she laments how, Parliament is being silenced by appointing backbenchers on many boards, frequently with higher salaries than those of ministers, so as to effectively win their silence. Yes, it is all promising and it is worth remembering how S&P Global Ratings has affirmed our A-/A-2'long- and short-term sovereign credit ratings with the outlook remains stable.
In their review, S&P noted that the economy has continued to expand rapidly and that its debt levels are manageable. The agency commented that a key fiscal risk emanates from the government's fixed energy price subsidy, (now reduced in half) and that while measures to improve the rule of law and governance have been implemented, yet Malta still faces challenges.
It falls short on a number of areas compared to international standards, and the country scores weakly in corruption perceptions, particularly in a European context. Naturally, no discussion is complete without mentioning the exemplary tourism revival in past years, since the two ugly years of the pandemic.
Last year, the Malta International Airport welcomed more than 8.3 million passengers between January and November, with the 8 millionth passenger milestone being reached for the first time in the airport's history. Kudos go to Labour MEP Daniel Attard as he has been unanimously appointed to the Steering Group of the European Parliament's Tourism Task Force.
This cross-party endorsement underscores the trust placed in Malta's contribution in bolstering a sector pivotal to the Med., economic growth and European competitiveness. On a sore note, we cannot omit to mention a drawback that is our educational system; with only one in five students passing Matsec exams.
Realistically, given the millions invested in education, the maintenance of a low scholastic level each year carries deep economic and social implications for Malta's both present and future digital industry.
In summary, many still hope, that 2025 will augur well for our country's leaders to stand tall and boost exports by lifting their heads above the parapet.
George M. Mangion is a partner at PKF, an audit and business development firm