VALLETTA — Fitch Ratings has reaffirmed Malta’s A+ credit rating, acknowledging the country’s robust economic growth while cautioning about looming fiscal challenges.
According to Namibia Press Agency, Fitch’s latest report, released on Saturday, praised Malta for its dynamic economic performance, projecting a notable GDP growth of 5.7 percent for this year. This figure notably surpasses the Eurozone’s average growth rate of 0.8 percent and the 2 percent average for other A-rated nations. The agency attributed this growth primarily to the booming services and financial sectors, coupled with a vigorous recovery in tourism.
Despite these positive indicators, Fitch expressed concerns over structural hurdles, particularly in the labor market. While unemployment in Malta is expected to stay low at 3.2 percent—well below the Eurozone’s average of 6.5 percent—the report highlighted potential risks from skill shortages and relatively low productivity levels that could impede future economic expansion.
On the fiscal front, Fitch forecasts a gradual reduction in Malta’s fiscal deficit, from 4 percent of GDP in 2024 to 3 percent by 2026. However, the country is under scrutiny from the EU for its excessive deficit, triggered by regulatory changes implemented this year. Fitch also flagged uncertainties surrounding the government’s fixed-price energy policy, noting the absence of a defined exit strategy could pose additional fiscal pressures.
Malta’s national debt ratio was reported at 47.3 percent of GDP at the end of 2023, with expectations of a slight increase to 49.6 percent by the end of 2024. Fitch suggested that an upgrade to Malta’s credit rating might be possible if the government successfully pursues sustained fiscal consolidation and reduces the national debt. Conversely, risks of a downgrade could emerge if governmental debts escalate, economic growth falters, or shifts in regulatory and tax frameworks deter foreign investment.
Prime Minister Robert Abela responded positively to the reaffirmation of Malta’s A+ rating. On the social media platform X, he highlighted, “Another A+ rating for Malta by Fitch on the basis of our ‘strong economic momentum’ with growth projected at seven times the Euro area average. This will enable us to lower taxes and maintain energy subsidies while still reducing the deficit.”