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14 maltatoday | SUNDAY • 1 MARCH 2026 NEWS Economist Malta's JP Fabri LAST Thursday, the NSO re- leased the latest GDP figures. They confirm something im- portant, and it is not simply that Malta is growing. We already knew that. What the latest data tells us is that the Maltese econ- omy is shifting gears. In the fourth quarter of 2025, real GDP expanded by 6.4% year on year. That is a strong number by any European benchmark. Nominal output for the quarter reached €6.3 billion, marking another step up in the scale of the econo- my. This comes after a year in which growth reached 7%, one of the strongest performances in the euro area. Even looking ahead, the Central Bank pro- jects the economy to continue expanding steadily over the coming years, stabilising at around 3.6% to 3.7% annually through 2028. This is not a story of slow- down. It is a story of normali- sation. For the better part of a dec- ade, Malta experienced a peri- od of rapid economic scaling. GDP more than doubled in nominal terms compared to the early 2010s. Employment surged, new sectors deepened, migration supported labour supply and the post-pandem- ic rebound added another wave of acceleration, pushing growth to unusually high levels for a small advanced economy. That phase is now giving way to something more mature. The composition of the lat- est growth figures helps ex- plain why. In the final quar- ter of 2025, both domestic demand and external demand contributed equally to expan- sion. Household consumption continued to grow at a healthy pace. Government consump- tion remained strong. Exports rose solidly, outpacing imports and reinforcing Malta's posi- tion as a competitive services exporter. The current account is projected to remain comfort- ably in surplus over the medi- um term, hovering around 6% to 7% of GDP. For a small open economy, this external strength matters. It signals that growth is not purely inward-looking or credit-driven. It reflects pro- ductive capacity that generates earnings beyond the domestic market. On the production side, the structure of the economy re- mains clear and consistent with the transformation of the last decade. Services dominate growth. Wholesale and retail trade, transport, information and communication, profes- sional services and public ad- ministration remain central contributors to value added. Industry plays a smaller role. Malta has evolved into a ser- vice-oriented growth model, and the data shows that model remains resilient. The labour market reinforces this picture of stability. Unem- ployment is projected to set- tle around 2.8% in the coming years, a level that reflects sus- tained tightness. Employment growth, while moderating compared to the rapid expan- sion of previous years, remains positive. Compensation per Meat and juice prices drive grocery bills higher Households in Malta are facing persistent pressure at supermarket checkouts, with rising meat and juice prices pushing food inf lation above the euro area average, according to new Central Bank analysis HOUSEHOLDS are con- tinuing to feel the squeeze at the supermarket as food prices fluctuate, with staples like meat and everyday re- freshments emerging as key drivers of inflation. A recent report by the Cen- tral Bank of Malta shows that although overall food inflation averaged 3.2% in 2025, a surge in unprocessed food prices that reached 6.5% in December, has kept household budgets under strain. The strongest upward pressure on grocery bills has come from the butcher's counter. Meat alone added 0.2 percentage points to the overall inflation rate, reflect- ing global trends that kept international meat prices elevated, with a 6.1% annual increase recorded by Janu- ary 2026. Local beef prices rose par- ticularly sharply, outpacing the euro area average by 5.1 percentage points. Other meat types, such as poultry, also saw faster price growth in Malta than in the rest of the euro area. Shoppers have also en- countered unexpectedly steep increases in the bever- age aisle. Fruit and vegetable juices registered the high- est average inflation rate in Malta during 2025, climbing at more than twice the pace seen across the euro area. Other everyday staples— milk, cheese, eggs and con- fectionery—also contributed to the rising cost burden. The analysis, prepared by senior economist Maria Christine Saliba, highlights how Malta's price dynamics differed from those else- where in the currency bloc. While Malta recorded 3.2% food inflation in 2025 com- pared with the euro area's 2.8%, other countries were more affected by a sharp 17.3% spike in coffee pric- es. Malta's increase in coffee prices was more moderate. Signs of easing ahead There are tentative indi- cations that price pressures may gradually ease. Retail- ers' expectations for future increases have fallen sharp- ly from their 2022 peaks to levels closer to long-term norms. Although expecta- tions edged up slightly in January 2026, the broader trend suggests the most vol- atile phase may have passed. The central bank projects a gradual moderation in the coming years, forecasting unprocessed food inflation of 3.5% and processed food inflation of 3.1% by 2028. This cooling outlook is ex- pected to be supported by slower growth in interna- tional meat prices. While short-term uncertainty re- mains, analysts say the era of dramatic price spikes appears to be giving way to a period of steadier normal- isation. The analysis is based on Recent Dynamics In Food Inflation, a specialised study featured in the Central Bank's Outlook for the Mal- tese Economy, prepared by Saliba within the bank's Eco- nomic Projections and Con- junctural Analysis Office. JAMES DEBONO jdebono@mediatoday.com.mt