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9 maltatoday | WEDNESDAY • 4 JUNE 2025 OPINION The performance of the Maltese economy Rodrick Zerafa Rodrick Zerafa is CEO of Servizzi Ewropej Malta THE Central Bank of Malta's annual re- port for 2024, released in April, shows that despite a difficult international cli- mate, the Maltese economy remained resilient. The gross domestic product (GDP) grew at a pace that surpassed that of most euro area countries. Eco- nomic growth was a staggering 6%, sig- nificantly higher than the 0.9% regis- tered by the euro area. While domestic GDP growth is ex- pected to moderate to 4% during 2025 it still is a significant performance. The above average GDP growth allows the debt-to-GDP ratio to remain below the Maastricht criteria. MOREOVER, it means that the econo- my is doing well and people are better off, while the government has the nec- essary income to invest in social servic- es and infrastructural projects. The CBM report also pointed out that in the first three quarters of 2024, the unemployment rate remained histor- ically low, at roughly half the level re- corded in the euro area. Furthermore, employment continued to increase though at a slower rate than that of the previous year. All this indicates the Maltese economy is healthy despite the various geopolitical challenges such as the Russian invasion of Ukraine. As regards inflation, which is fre- quently mentioned by the Opposition as a challenge, one needs to clarify that with an open economy like Malta's, in- flation is influenced by prices that are determined abroad. Furthermore, monetary policy, which is the most important tool to control inflation, is in the hands of the Euro- pean Central Bank (ECB) which takes into consideration the data from the whole euro area. Despite all this domes- tic inflation as measured by HICP, and HICP excluding energy and food, stood at 1.8% and 2% respectively below the euro area average. The reasons for lower inflation in 2024 were the government subsidies on en- ergy and fuel, and the Stabbiltà scheme that dampened food inflation. Within this context, the Opposition's criticism on inflation is not only unfounded but grossly unfair. The affluence of the Maltese economy is also demonstrated by the deposits held with banks. The CBM annual re- port states that resident deposits with monetary financial institutions in Malta increased by 7% in 2024, reaching €25.4 billion by year-end. This rate of increase was higher than that registered in 2023. But Malta's positive economic perfor- mance has also been confirmed by rep- utable international credit agencies. In April of this year DBRS confirmed Mal- ta's Long-Term Foreign and Local Cur- rency – Issuer Ratings at A (high). The DBRS April report stated that Maltese economy was likely to grow compara- tively strong. The report also highlight- ed that the rating is supported by a solid external position and a strong banking sector that is well capitalised and has robust liquidity buffers. DBRS highlighted the continued strong commitment by the authorities to strengthen the anti-money launder- ing framework. Malta made significant progress in this area, enabling its exit from the Financial Action Task Force's (FATF's) grey list in June 2022—just one year after being placed on enhanced monitoring. This was another achievement of the current administration. The strong economic performance during successive Labour governments since 2013 is no coincidence. While previous Nationalist administrations advocated and implemented austerity measures, Labour embarked on a pol- icy of incentivising entrepreneurship and economic activity. No taxes were increased and despite this, government revenue still went up because more people were working and companies were making more profits. This policy created a feel-good factor that contin- ues to stimulate economic activity. But these achievements should not be taken for granted. There is no guarantee that any pro- spective future PN government will pursue the same economic policies that have produced the success of the last 12 years. The PN constantly criticises the government's economic manage- ment despite its success and Nationalist MPs voted against the last budget even though it contained several positive economic measures, including the larg- est ever income tax cut. During the past years, economic growth has been the rule of the day. It is clear that the Labour government has managed to steer the economy in a very effective way. Without good economic management Malta's standard of living will deteriorate and I am sure that no- body wants this to happen. The Central Bank of Malta's annual report for 2024 shows that Malta's economic growth was a staggering 6%, significantly higher than the 0.9% registered by the euro area The economy is doing well and people are better off, while the government has the necessary income to invest in social services and infrastructural projects.

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