Debt levels to remain within EU threshold until 2025

Slower GDP growth estimated in coming years as inflation bites

Debt-to-GDP levels are set to remain in line with the EU’s stability and growth pact, only going upwards of 60% in 2024 by 0.3 percentage points.

In 2022, debt-to-GDP levels stood at 57%, and is set to go up to 59.1% in the following year.

By 2024 it will reach 60.3%, and will dip back down to 60% in 2025.

Malta’s real GDP growth in coming years is set to hover between 3.5% and 3.8% as inflation, but will remain above the EU average.

According to Budget forecasts, real GDP growth will fall to 3.5% next year, after standing at 6% in 2022.

In 2024, it will rise upwards to 4.3%, and fall to 3.8% in 2025.

Nominal GDP, which is not adjusted for inflation, reached 11.3% in 2022, but will also fall to 7.3% in 2023. It will continue downwards and reach 6.1% in 2025.

Malta’s real GDP growth rate was almost double that of the EU average, which stood at 2.7% in 2022.

By 2023, the EU average will fall to 1.5%, compared to Malta’s 3.5% growth rate.

Inflation is being estimated to subside in the following years. Malta’s inflation rate is set to fall from 5.7% in 2022 and 3.7% in 2023.

It will go on to dip to 2.6% in 2024, and 1.9% in 2025.

The deficit as a percentage of GDP stood at -5.8% this year, and is expected to shrink steadily and reach -2.8% in 2025.

Driving this, government spending is set to fall over the years. Spending as a percentage of GDP stood at 36.9%. By 2025, it will fall to 33.7%.

Capital expenditure will reach €920 million in 2023, higher compared to 2022 levels. A third of capital expenditure is set to be sourced from EU funds.