The COVID-19 pandemic has raised several economic concerns across all corners of the globe. A recovery from the turbulence of this unprecedented period although is expected, will take time. According to the European Commission, we should not expect the economies of the member states to return to normal before 2023. With that said, it is expected that Malta will enjoy a modest recovery in 2021 and 2022.
An uncertain scenario
Although forecasts do indeed point positively for Malta, there is an uncertainty associated with the development of this pandemic. Will a cure be effective? Will enough people take it? Can we expect a return to normal life in 2021? These are all questions which will significantly impact the economic recovery.
The European Commission’s autumn forecast highlighted that a quick turnaround for the economies of Europe is not likely. In fact, the forecast indicated that countries may need more stimulus packages to combat the repercussions of the COVID-19 pandemic. The country with the worst forecast is Spain.
Europe registered a recovery in the middle of 2020, which was better than anticipated. The economic crash in the nineteen countries that use the Euro will be that of minus 7.8 percent instead of the 8.7 percent predicted.
When it comes to Malta, the forecast made is quite accurate. Malta’s economic performance remains consistent with what was predicted in the summer. With that said, the European Commission recognises that the pandemic has had its negative repercussions on the Maltese economy, namely on tourism and external trade. This has led to a temporary uptick in unemployment.
The report speaks quite positively about Malta, highlighting that it recorded one of the highest GDP growth figures within Europe. This unprecedented pandemic has impacted the country’s growth trajectory which is heavily reliant on tourism.
The economic impacts of the pandemic have been cushioned by wage support and a vouchers scheme to boost the local economy, namely hotels, restaurants and shopping outlets. The economic performance of Malta will be heavily dependent on how the pandemic progresses and the impacts of less beneficial trading relationships between the European Union and United Kingdom.
The European Union Commission also discussed that Malta’s unemployment rate is expected to increase to 5.1 percent, from its lowest ever of 3.6 percent. In 2022, this is expected to decrease to 4.1 percent. The deficit that will be registered in 2020 is expected to ease in 2021.
Malta is expected to make less income from its citizenship scheme, which is currently under heavy scrutiny, due to legal implications.
The government commented on this development, expressing its delight for the growth anticipated for 2022. This is testament of the effectiveness of the measures announced in the prior months.