Malta's economy is expected to sustain its growth momentum in 2025, driven by robust domestic consumption and positive net exports. Following a notable 6.0% expansion in GDP in 2024, the Maltese economy is expected to grow by 4.1% in 2025 and 4.0% in 2026. The labour market is projected to stabilise and inflation to slow down. On the fiscal front, the government deficit narrowed to 3.7% of GDP in 2024, and is expected to decline further, going below the 3.0% threshold in 2026, with the debt ratio stabilising below 48% of GDP.
| Indicators | 2024 | 2025 | 2026 |
|---|---|---|---|
| GDP growth (%, yoy) | 6,0 | 4,1 | 4,0 |
| Inflation (%, yoy) | 2,4 | 2,2 | 2,1 |
| Unemployment (%) | 3,1 | 3,1 | 3,1 |
| General government balance (% of GDP) | -3,7 | -3,2 | -2,8 |
| Gross public debt (% of GDP) | 47,4 | 47,6 | 47,3 |
| Current account balance (% of GDP) | 3,6 | 3,7 | 3,4 |
Growth outlook remains upbeat
Real GDP in 2024 grew by outstanding 6%, 1.0 pps. higher than expected in autumn, on the back of robust private and public consumption and positive contribution from net exports, namely by the tourism and financial and professional services sectors.
As inflation slowed down, real households’ incomes grew and private consumption exhibited an expansion of 5.7%, while government consumption rose by 7.3%, giving a substantial boost to overall GDP growth.
Services exports remain a strong growth factor in Malta, driving the positive net trade contribution to GDP. During 2024, total tourist expenditures in Malta grew by a remarkable 23.1% compared to 2023, when the tourist flows already exceeded the pre-pandemic levels. Other service-oriented sectors such as recreational, professional, IT, and financial services expanded as well. Concerning the uncertainty in the international environment, Malta’s economy has a limited exposure to shocks in goods trade and is set to benefit from lower international commodity prices. Investment growth recovered by 2.4% in 2024 after a sharp drop in 2023.
Real GDP growth in Malta is forecast to slow down somewhat but to remain robust, at 4.1% in 2025 and 4.0% in 2026. Private consumption is expected to grow at 4.1% in 2025 and 3.9% in 2026, continuing to provide the biggest impulse to economic expansion. Net exports and investment are also expected to continue to provide a positive contribution. In particular, investment is forecast to increase by 2.5% in 2025 and 2.1% in 2026. These rates, however, are visibly below their long-term average.
Employment growth is expected to stabilise
Employment grew by 5.1% in 2024, still supported by strong immigration flows to fill the domestic labour shortages. Nonetheless, employment growth is expected to decelerate towards pre-pandemic growth rates, reaching 3.1% in 2025 and 2.8% in 2026. The unemployment rate is set to remain low at 3.1% in 2025 and 2026. In this tight labour market environment, the nominal wage growth per employee is forecast to exceed inflation and grow by 4.1% in 2025 and 3.5% in 2026.
Inflation slows in line with the global expectations
Inflation in 2024 slowed to 2.4%. and is forecast to reach 2.2% in 2025 and 2.1% in 2026, with food and services inflation set to be the main contributors. Energy prices are expected to remain stable as Maltese authorities continue to maintain energy prices at 2020 levels.
The government deficit is set to decline
In 2024, the general government deficit fell to 3.7% of GDP, from 4.7% in 2023, due mainly to the increase of taxes on income and wealth driven by non-recurrent transactions as well as gains related to an improved tax collection. This was partially compensated by an increase of current expenditures and of other capital expenditures related to the national airline.
In 2025, the deficit is forecast to decrease further to 3.2% of GDP. This is mainly driven by a decrease in other capital expenditures due to the expiry of costs related to the national airline. Subsidies are expected to further drop as percentage of GDP while the measures to mitigate the impact of high energy prices are projected to remain unchanged in nominal terms, thereby declining as a share of GDP. Social expenditures are also expected to decline somewhat as a share of GDP. This is projected to be partially compensated by decreasing revenues from personal income taxes, due to a comprehensive reform of income brackets. Based on unchanged policies, the deficit is set to decline to 2.8% of GDP in 2026 mainly reflecting a further decrease of subsidies as a share of GDP and the higher growth rate of revenues compared to the growth rate of nominal GDP.
The public debt-to-GDP ratio is expected to broadly stabilise over the forecast horizon below 48% of GDP.