Central bank of Malta lowers its estimates for GDP growth

8/13/2022 6:47:15 AM

(MENAFN) In an update to its outlook for the Maltese Economy released on Friday, the Central bank of Malta once more reduced its projected gross domestic product growth by 0.2 percentage points to 5.2 percent for this year.

In June, the central bank already revised its forecast for GDP growth downward.

The island's GDP is expected to grow by 4.5 percent in 2023, which is 0.4 percentage points less than the previous estimate, and by 3.7 percent in 2024, which is 0.1 percentage points less.

"The downward revisions reflect the strong pick-up in inflationary pressures as well as a further deterioration in the international economic environment due to the recent cuts in gas supplies to European countries," the bank stated in its report.

According to the report, net exports will likely be the main engine of growth this year due to a decline in import-intensive investment spending from the extraordinarily high levels reached in 2021.

Because growth in activity is expected to normalize after a strong rebound last year, it will still be positive but significantly less than that of 2021.

As shown in the report, domestic demand is anticipated to take the lead in driving economic growth in the years to come, particularly from private consumption. The contribution of net exports is expected to decline over the projection horizon, reflecting the gradual normalization of tourism exports and the general slowing of growth in foreign demand.

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