The Central Bank of Malta has lifted its GDP growth forecast for 2026 by 0.1 percentage points, projecting that the Maltese economy will expand by 3.8% this year, according to a media release published on 20 August 2026. Growth is then expected to ease slightly to 3.6% in 2027 before returning to 3.8% in 2028.

The bank attributes the projected resilience principally to private consumption, which it expects to continue growing at a strong pace across the full forecast horizon. The upward revision to this year's figure is modest, but it represents a positive adjustment from the bank's previously published outlook.

On prices, the bank projects annual HICP inflation at 2.2% in 2026, down from 2.4% in 2025, with easing food price pressures driving the decline. Inflation is forecast to tick back up to 2.4% in 2027, reflecting geopolitical tensions and supply disruptions linked to the Middle East conflict, before settling at 2.2% again in 2028. Against the bank's previous forecasts, HICP inflation has been revised down by 0.2 percentage points for 2026 and 0.1 percentage points for 2027.

The fiscal picture is also improving. The budget deficit is forecast to narrow from 2.2% of GDP in 2026 to 1.6% by 2028, while the debt-to-GDP ratio is projected to fall from its 2025 peak of 46.4% to 46.1% this year and further to 44.2% by 2028.

The bank assesses risks to growth as broadly balanced. The primary downside concern is uncertainty surrounding the Middle East conflict and related supply bottlenecks, though the bank notes that private consumption could outperform projections if employment or wage growth comes in stronger than anticipated.

Inflation risks are skewed to the upside, the bank says, driven by the possibility of higher-than-expected services inflation and second-round effects from energy-related disruptions. On the fiscal side, risks lean towards wider deficits, with potential overspending on energy support measures flagged as the main pressure point.