Malta's economy is expected to sustain strong growth in 2025, driven by robust domestic consumption and tourism. Economic growth is expected to reach 4.0% in 2025, moderating to 3.8% in 2026 and 3.5% in 2027. Inflation is projected to slow down while the labour market remains tight. The government deficit is expected to decrease to 3.2% of GDP in 2025, 2.8% in 2026, and 2.6% in 2027. The debt-to-GDP ratio is expected to stabilise at around 47.3%.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 4.0 | 3.8 | 3.5 |
| Inflation (%, yoy) | 2.4 | 2.1 | 2.0 |
| Unemployment (%) | 3.0 | 2.9 | 2.9 |
| General government balance (% of GDP) | -3.2 | -2.8 | -2.6 |
| Gross public debt (% of GDP) | 47.0 | 47.2 | 47.3 |
| Current account balance (% of GDP) | 5.1 | 5.6 | 5.6 |
Growth outlook remains robust but slowing
Real GDP is projected to grow by 4.0% in 2025, driven mainly by robust private and public consumption, investment, and supported by growth in tourism, gaming and financial and professional services.
On the back of higher real household incomes, private consumption is expected to grow by 4.0% in 2025, 3.8% in 2026, further slowing to 3.5% in 2027. Government consumption growth is set to reach 6.9% in 2025, but then slow down to 4.1% in 2026 and 3.1% in 2027, still supporting overall GDP growth.
Tourism is expected to continue its strong growth in 2025, following another period of considerable rise in 2024. The tourism arrivals increase is especially pronounced in shoulder months outside summer. Recreational, professional, IT, and financial services are also projected to continue expanding, contributing positively to net exports. Malta’s direct exposure to US trade tariff uncertainties is relatively limited.
Real GDP growth is forecast to remain robust, though slowing, at 3.8% in 2026 and 3.5% in 2027, reflecting capacity constraints and higher prices in the tourism sector along with labour shortages. Net exports and investment are estimated to positively contribute to growth. Investment is expected to grow strongly by 6.0% in 2025, followed by 1.0% expansion in 2026 and 3.0% in 2027.
Moderating employment growth, with persistent labour shortages
Employment is forecast to grow by 3.7% in 2025, still supported by high immigration flows, which are expected to moderate due to tighter immigration rules. Labour shortages are expected to persist. Employment growth is expected to slow to 2.9% in 2026 and 2027. The unemployment rate is estimated to remain low and stable around 2.9%. Despite the tight labour market, the nominal wage growth per employee is forecast to moderate but still exceed inflation, slowing from 5.9% in 2025 to 2.9% in 2027.
Inflation expected to slow further
Inflation is set to slow to 2.4% in 2025, then decrease to 2.1% in 2026 and 2.0% in 2027, mainly driven by food and services inflation. The Maltese authorities are expected to keep retail energy prices unchanged over the forecast horizon through state subsidies.
Decline in government deficit driven by higher revenue from economic growth
In 2024, the general government deficit fell to 3.5% of GDP from 4.4% in 2023. This was due to strong revenue growth and significant tax windfalls which were partially offset by increased expenditure and capital spending on the national airline.
In 2025, the deficit is forecast to decrease to 3.2% of GDP, reflecting an increase in indirect tax revenue as a result of favourable economic conditions and tourism, though changes in income tax brackets will reduce personal income tax intakes. Despite the fact that the above-mentioned transfers to the national airline were not repeated, government expenditure is expected to increase significantly in 2025, driven by strong increases in intermediate consumption and gross fixed capital formation.
The deficit is set to decline to 2.8% of GDP in 2026, with strong revenue growth despite slower economic expansion. Public sector wages are expected to increase at a slower pace, following the sharp increases in 2024-2025. Subsidies and intermediate consumption as a share of GDP are also expected to decrease. By 2027, based on unchanged policies, the deficit is expected to decline slightly to 2.6% of GDP.
The public debt-to-GDP ratio is expected to broadly stabilise at around 47.3% over the forecast horizon.