Issue link: https://maltatoday.uberflip.com/i/674824
maltatoday, WEDNESDAY, 4 MAY 2016 7 News EU forecasts moderate but robust GDP growth for Malta in 2017 THE European Commission has forecast that Malta's real GDP growth will slow to 4.1% towards the end of the year, and grow by a moderate but robust 3.5% in 2017. This follows last year's economic growth of 6.3%, mainly driven by large-scale energy projects. In its spring economic forecast, the EC said that deceleration is set to come on the back of investment, that is seen stabilizing from a high base in 2015. The large energy projects – namely the LNG power station – that flattered investment in 2015 are expected to reach completion, while the expansion in residential construction is ex- pected to moderate. Household consumption is also projected to slightly decelerate but remain robust towards the end of the year, reflecting strong employment growth and rising real wages. These developments will be partially offset by stronger net exports, reflecting weaker de- mand for imports as well as a pick- in demand from trading partners. Household consumption is ex- pected to decelerate further in 2017, reflecting normalisation of the saving rate, while job creation and real wages are forecast to rise at robust rates. Government consumption is projected to increase strongly and contribute significantly to growth. Investment is also projected to expand moderately on the back of large healthcare and education projects. Growth could be stronger if the reduction in the household saving rate, supported by expected gains in disposable income and popu- lation growth, carries over for the rest of the forecast horizons. Downside risks are mainly linked to slippages in the investment schedule for large projects. Inflation is projected to increase from 1.2% in 2015 to 1.4% to 2.2% in 2017. Acceleration is expected to come mainly from a gradual recovery in energy prices, follow- ing the electricity tariff cuts in previous years. Services prices are forecast to pick up more strongly in 2017, contributing to overall price inflation. Core inflation is projected to outpace the euro area average and to come in at 1.7% and 2.2% in 2016 and 2017 respectively. Further deficit, debt ratio reductions expected The European Commission projects the deficit to further decrease to 0.9% of the GDP in 2016 and 0.8% in 2017, down from 1.5% last year and 2% in 2014. Current revenue is expected to increase this year as a result of higher excise duties and higher proceeds from the IIP citizen- ship programme – which are forecast to be only partly offset by the lowering in income tax for low-income earners and the phasing out of the eco-contri- bution. Current expenditure is expected to continue growing due to social measures, such as upward adjustments of the min- imum contributory pension and the partial funding of the cost of home care for the elderly. Public investment is expected to decline thanks to the phasing out of the capital injection to Air Malta, while the sharp decline in the absorption of EU funds due to the start of a new program- ming period should be partially compensated for by a higher re- liance on national funds. The general government debt is projected to decrease from 63.9% of GDP in 2015, to 60.9% in 2016 to 58.3% in 2017. The Commission said the drop in EU funds should be compensated for by higher reliance on national funds Ira Losco will be donning a massive brown and gold coat with 3D images projected onto it in her Eurovision performance. Ahead of her rehearsal on Tuesday, she told Eurovision TV that her performance and outfit will feature "cutting-edge technology". "Hopefully, everything will go as planned," she said. "When you're using advanced technology, it all depends on the people backstage getting it right." Eurovision website Escflashmalta.com said that Losco's dress depicts 3D technology and will be removed midway through the performance by Skorpion, a professional male dancer. The website toasted Losco's rendition of 'Walk on Water' as "stunning" and one that "ripped the Global Arena to shreds". Losco will be the last singer to perform in the first semi-final of this year's Eurovision Song Contest in Stockholm on 10 May. The second semi final will take place on 12 May, with the final taking place two days later. Ira Losco is currently ranked as the 5th favourite by the bookies to win the entire contest – behind Russia, France, Australia, and Sweden. Ira Losco's outfit to feature 'cutting-edge technology' 4% interest rate attracted thousands of depositors CONTINUES FROM PAGE 1 Malta- Today understands that politi- cal pressure was also brought to bear upon the ECB to finally take action, when Belgian and Dutch depositors were being targeted by the online bank with some of Eu- rope's highest interest rates. In 2015, the bank started mar- keting its 4% term deposits to attract 30,000 clients in the Bel- gian and Dutch markets, so that it could start offering consumer loans by the second half of 2015. Pricewaterhouse Coopers Malta has been appointed to administer the bank and take charge of its as- sets, but deposits from customers will be halted and withdrawals capped at €250. The direct bank is owned by its two Finnish co-chairmen, Mika Lehto and Heikki Niemelä, and its directors include former prime minister Lawrence Gonzi and Joseph F.X. Zahra, recently ap- pointed by Pope Francis to head a special finance commission for the Vatican. The bank is owned by Nevestor SA of Belgium (40%) while the rest is split between Ninovan Ltd and Shilmore Ltd of Cyprus (30% each), ultimately jointly owned by its founders Heikki Niemelä and Mika Lehto. Nemea specialised in providing banking and investment services to individuals, businesses, insti- tutions and high net worth indi- viduals across the European eco- nomic area.