Malta's economy continued to record robust growth during the first quarter of 2026, despite expanding at a slower pace than in the previous three months, the Central Bank of Malta said.

In its latest Quarterly Review, the Bank said economic growth remained considerably stronger than the euro area average and was largely driven by domestic demand, even after accounting for the imports needed to support that spending.

However, potential output grew faster than real gross domestic product compared with the previous quarter, leading to a narrowing of the economy's positive output gap.

The Central Bank's Business Conditions Index rose marginally during the quarter, indicating that economic activity continued to expand at a rate above its long-term average.

Malta's labour market also remained strong, with both employment and activity rates increasing during the first three months of the year.

Employment growth continued to outpace that recorded across the euro area, according to Labour Force Survey data. Although the unemployment rate increased slightly, it remained well below the euro area average.

Labour market conditions remained tight, with the number of job vacancies and the vacancy rate both rising compared with the same period last year and remaining at historically high levels.

Meanwhile, consumer price inflation eased during the quarter, with annual Harmonised Index of Consumer Prices inflation falling from 2.5% in December 2025 to 2.3% in March 2026.

Inflation excluding energy and food increased slightly to 2.4%. While Malta's overall inflation rate remained below the euro area average, underlying inflation was higher than that recorded across the currency bloc.

The government registered a larger deficit during the first quarter than in the same period of 2025.

Measured over four quarters, the deficit-to-GDP ratio increased from the final quarter of last year and stood broadly in line with the euro area average.

The debt-to-GDP ratio, however, declined compared with the previous quarter and remained considerably below the euro area average.

The European Central Bank kept its key interest rates unchanged during the first quarter of 2026. It subsequently raised its main policy rates by 25 basis points in June, stating that the decision was intended to help inflation stabilise at its medium-term target of 2%.

The ECB said the move left it well positioned to respond to uncertainty arising from the war in the Middle East.

Malta's economy continued to record strong growth during the first quarter of 2026, despite expanding at a slower pace than in the previous three months, the Central Bank of Malta said.

In its latest Quarterly Review, the Bank said economic growth remained considerably stronger than the euro area average and was largely driven by domestic demand, even after accounting for the imports required to support that spending.

However, potential output grew faster than real gross domestic product compared with the previous quarter, leading to a narrowing of the economy's positive output gap.

The Central Bank's Business Conditions Index rose marginally during the quarter, indicating that economic activity continued to expand at a rate above its long-term average.

Malta's labour market also remained strong, with both employment and activity rates increasing during the first three months of the year.

Employment growth continued to outpace that recorded across the euro area, according to Labour Force Survey data. Although the unemployment rate increased slightly, it remained well below the euro area average.

Labour market conditions remained tight, with the number of job vacancies and the vacancy rate both rising compared with the same period last year and remaining at historically high levels.

Meanwhile, consumer price inflation eased during the quarter, with annual Harmonised Index of Consumer Prices inflation falling from 2.5% in December 2025 to 2.3% in March 2026.

Inflation excluding energy and food increased slightly to 2.4%. While Malta's overall inflation rate remained below the euro area average, underlying inflation was higher than that recorded across the currency bloc.

The government registered a larger deficit during the first quarter than in the same period of 2025.

Measured over four quarters, the deficit-to-GDP ratio increased from the final quarter of last year and stood broadly in line with the euro area average.

The debt-to-GDP ratio, however, declined compared with the previous quarter and remained considerably below the euro area average.

The European Central Bank kept its key interest rates unchanged during the first quarter of 2026. It subsequently raised its main policy rates by 25 basis points in June, stating that the decision was intended to help inflation stabilise at its medium-term target of 2%.

The ECB said the move left it well positioned to respond to uncertainty arising from the war in the Middle East.