Planning beyond short-term forecasts

The key economic performance indicators continue to look good for this and next year. GDP growth, unemployment, debt and fiscal balances are all projected to be better than those of most EU countries. It is quite a different story, however, for non-financial indicators that reflect the challenges that Maltese society has to address in the next few years.

The European Union’s spring economic forecast confirms that, thanks mainly to a substantial increase in domestic demand, the Maltese economy will grow in real terms by 5.5 per cent this year and by 4.8 per cent in 2020. With unemployment at four per cent, the country has practically achieved full employment.

Investment, which now has hit the 20 per cent target when compared to GDP, will continue to grow in 2020. Thanks to the shift to the services sector, the import content of Malta’s exports has been steadily declining in the last few years. However, as private and public consumption is likely to continue to grow as a result of the good economic situation, imports will increase, turning the growth contribution of net exports from positive to slightly negative.

This is not a wrong place to be when the international macroeconomic...