With the economic support measures launched by the government, our country will suffer the least in the European Union
In their economic forecasts, the World Economic Outlook, experts from the International Monetary Fund, anticipate that Malta will suffer the least negative economic impact from COVID-19. While across the eurozone a 7.5% drop in GDP is expected in 2020, for Malta the anticipated decline is 2.8%, only one-third of the economic downturn expected for the rest of Europe.
Malta’s neighbouring countries are expected to have far greater economic impact than the European average. Italy is expected to see an unprecedented decline of over 9%, while the Spanish economy is expected to shrink by 8%. Europe’s economic engine, Germany, is expected to see a 7% drop in its economic strength.
The unemployment rate in our country is expected to be 5%, or well below the 7.3% that our country experienced at the height of the 2009 economic crisis. The rate predicted by the IMF for our country this year is also well below the 6.4% that this administration inherited from the previous government.
In terms of inflation, IMF experts are predicting that the inflation rate in Malta will fall to 0.6%, or less than half the rate observed last year. The forecast rate for Malta is also two percentage points lower than the average inflation rate under the previous administration. Across the eurozone, unemployment is expected to rise to 10.4% or more than double that of our country, while that of Malta is expected to be much lower, at 4.4%.
International experts are predicting that the Maltese economy will rebound strongly from the effects of COVID-19 in 2021, with an expected growth rate of 7%. This is when growth in the rest of Europe is below 5%, which will not offset the expected COVID-19 result which is expected to be more than 7%.
The World Economic Outlook says that “this crisis is like no other”, with the biggest recession since the Great Depression of the 1930s. In this context, the forecast for Malta is very encouraging. In fact, last week, in the Article IV report for our country, the IMF had already claimed that “Malta has continued to overperform European peers”, and had also indicated in their analysis that the effect of the pandemic in our country is expected to be of average level compared to other countries. In their report they urged the government to use the fiscal space to help the economy, arguing that it should continue investment in infrastructure as well as structural reforms.
This is the second international report issued on Malta since the emergence of COVID-19. A few weeks ago, S&P Global Ratings experts also anticipated that the impact on our country would be far better than the European average.
The Ministry of the Economy, Investment and Small Enterprises welcomes the analysis of IMF experts. Minister Silvio Schembri said that “in recent weeks the work that has been done to launch economic support measures for businesses and self-employed workers has shown that despite the pressure and problems of the pandemic, the government continued to function well and was able to reach a new social pact by which to overcome one of the greatest economic challenges in our history.
Our country now has an economic stimulus package that is among the best in the world. The government reiterates its willingness that after the end of the pandemic, our country will return to unprecedented economic, institutional and social strengthening. We need to continue working to help businesses and the self-employed while continuing to restructure where needed.”