Malta has managed to maintain its A+ credit rating coupled with a stable outlook by agency Scope. The agency which is based in Germany passed on positive remarks in relation to Malta, earmarking its potential for growth, EU membership and solid history when it comes to reducing public debt, as key drivers for the country’s economic performance.
Although there are several aspects which point towards an exciting future for Malta, there are some matters which may hinder its growth. With the ageing population, excessive reliance on foreign employees and legacy issues pertaining to institutions in relation to regulation and governance may hinder its growth in the coming years. Other countries which have an A+ rating include France, Bulgaria, Spain, Slovakia and Japan.
Malta holds several strengths which contribute to its positive ratings. Driving this success are high GDP growth and consistently low unemployment. Malta is one of the few countries where more job openings are available than people. The country also performed well when it comes to managing inflation, with direct government intervention aimed at keeping energy prices in check.
The ratings agency expects Malta to progress well when it comes to its deficit which grew substantially during the COVID-19 pandemic. It also identified risks related to guarantees issued by government. Another risk highlighted is Malta’s ageing population where it is anticipated that the ratio of pensioners to workers is to increase significantly, representing additional costs. Malta must brace itself in this regard.
Malta also has to contend with the lack of workers, a problem which should be diluting now that travelling is normalising. Although the country continues to experience growth at an exciting pace, long-term sustainability challenges exist. One example is the traffic problem, which only seems to be getting worse as time progresses, with more cars on the road. On another note, property prices continue to increase, making more people susceptible to debt and homeownership substantially difficult. Further increases in relation to property might make the financial stability of families harder to achieve and maintain.
The Prime Minister of Malta Robert Abela received the rating assessment well, highlighting commitment towards an economy that benefits families and businesses. This latest rating is encouraging especially when considering the economic uncertainty and volatility that exist globally.
What are your views about the assessment made by this rating agency? Do you think that Malta’s economy is on the right path? Let us know your thoughts in the comments section below.