Perspectives

Macroeconomic highlights

Malta Budget 2017

Deloitte Malta presents a summary and analysis of the Malta Budget 2017 speech presented to the House of Representatives by the Hon. Prof. Edward Scicluna, Minister of Finance on 17 October 2016.

Economic growth

  • Real GDP growth of 4.1% is estimated for 2016 and 3.5% is projected for 2017.
  • Economic activity is still considered relatively robust, although recent developments are characterised by declining growth rates.
  • Domestic demand continued to be the main driver, contributing to circa 80% of growth. Net exports are expected to contribute moderately to growth in 2016, explained by a recovery in foreign demand.

Labour market

  • Employment growth is expected to hover at around 2.9% in 2016 and is projected at 2.7% for 2017.
  • The highest growth rates are being reported within the entertainment and recreation sector, professional services and support service activities.
  • Unemployment rates for both the current year and the next (2017) are forecast at 5.0%, close to the natural unemployment rate (4.0%).
  • Modest increases in nominal compensation per employee are observed, expected at 1.9% during 2016 and projected at 2.6% for 2017.
  • The supply of foreign workers and subdued international energy prices are considered to be the main reasons restraining wage growth.

Public finances

  • Fiscal consolidation is reported to progress in line with Government’s projections to the extent that original targets were exceeded.
  • The General Government Deficit is expected to fall to 0.7% of GDP in 2016, and projected at 0.5% for 2017, primarily on the back of strong nominal GDP growth.
  • Under a no policy change assumption, General Government Debt is expected to decline to 63.3% of GDP in 2016, and projections for 2017 place debt at 61.9% of GDP.  

Disclaimer: This publication reflects high level announcements made in the Budget Speech on 17 October 2016, which are typically implemented through detailed legislative amendments and tax guidelines that have yet to be published. Clients are advised to seek appropriate professional advice following the publication of such detailed amendments or guidelines and prior to implementing any actions based on the information given in this publication.

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