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Malta Outlook Stable

Malta Outlook StableMalta Outlook Stable

Moody’s rating agency has affirmed an A3 rating for Malta and confirmed that Malta’s outlook has remained stable, the government said in a statement.

Moody’s noted that Malta’s economy is strong, especially with regard to competitiveness, and added that structural reforms had helped Malta’s economic potential, the government added, NewsNow reported. Malta exceeded expectations in 2015 and Moody’s is expecting a 3.7% growth over the next two years. This is higher than the European average, the government said.

Moody’s praised Malta’s progress to reduce dependency on oil in the generation of electricity, the government said.

However, it said that its assessment of Malta’s economic strength has been constrained by its labor market rates which remain below the EU average, barriers to investment as flagged by its low ranking on the World Bank’s Ease of Doing Business report, and the small size of the domestic market with a population of just over 400,000.

In addition, risks to sustaining cost competitiveness are rising, reflecting the challenges to labor productivity from the shift in the economy to more labor-intensive services.

Moody’s also predicted that Malta’s government debt to GDP ratio will decline to just below 60% in 2017, after averaging 68% between 2010 and 2014 and dropping to 63.7% in 2015.

However, Malta’s sizeable contingent liabilities, which are among the highest in the EU and above the median of similarly rated peers, weighed on Moody’s assessment of fiscal strength. The credit rating agency noted that Malta’s track record of support to public corporations has fiscal implications and that the debt guaranteed by Malta’s government remains significant at €1.4 billion ($1.56 billion) or around 16% of 2015 GDP.

Financialtribune.com