Exports to turn negative but economic growth will remain strong – Central Bank

Economic growth over the coming years is expected to remain strong but exports will not be the primary driver, according to the Central Bank of Malta’s latest forecast.

In its projections to 2021 released on Friday, the CBM said upward revisions to private consumption and investment from previous forecasts were offset by downward revisions to net exports.

“Domestic demand, driven by higher consumption and investment, is anticipated to become the primary driver supporting the economic expansion over the projection horizon,” the CBM noted.

And while net exports are expected to provide some support this year, their contribution is expected to turn negative from 2019, reflecting higher import growth. 

The CBM is projecting that the pace of job creation will moderate, but remain quite strong. “The labour market is projected to remain tight, with the unemployment rate projected at 4% by 2021.”

Annual inflation, based on the Harmonised Index of Consumer Prices (HICP), is projected to edge up to 2.1% by 2021.

Government finances are expected to remain in surplus over the coming years and the debt-to-GDP ratio is projected to decline to below 40% by the end of 2021.