Malta: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Malta

The 2023 Article IV Consultation highlights that Malta has experienced an impressive recovery from the pandemic and demonstrated resilience to shocks resulting from Russia’s invasion of Ukraine. The challenge for the medium term is to ensure a robust policy framework to foster strong, socially- and environmentally-sustainable, and inclusive growth. Risks to the outlook are tilted to the downside in part due to spillover effects from a possible escalation of Russia’s war in Ukraine or of the Israel–Gaza conflict, as well as a deeper-than-expected economic downturn in Europe. Domestically, wage and inflationary pressures could be higher and more persistent. On the upside, lower-than-expected commodity prices would help decelerate inflation, ease fiscal pressures, and boost growth. Key priorities include containing demand pressures by accelerating fiscal consolidation, exiting gradually from the current fixed energy price policy while protecting vulnerable groups, maintaining financial stability, and boosting structural reform efforts. Boosting productivity will be imperative to achieve strong, socially-and environmentally sustainable, and inclusive growth.