Malta is set to remain one of the fastest-growing economies in the European Union over the next three years, according to the European Commission’s Autumn 2025 Forecast. The report projects that Malta will sustain robust economic momentum through 2027, supported primarily by strong domestic consumption, investment and continued expansion in key service sectors.

Real GDP growth is expected to reach 4.0% in 2025, easing slightly to 3.8% in 2026 and 3.5% in 2027. While moderating, these figures remain well above the EU average and underline Malta’s position as a resilient, high-growth economy.

The Commission attributes this outlook to several factors, including rising household incomes, strong private and public consumption, a buoyant tourism sector, and steady growth within iGaming, professional services, financial services and IT. Tourism, in particular, is set to maintain its upward trajectory following another exceptional year in 2024, with arrival numbers rising especially in shoulder months outside the traditional summer peak.

Private consumption is forecast to increase by 4.0% in 2025 as real incomes improve, before tapering slightly to 3.8% in 2026 and 3.5% in 2027. Government consumption will also remain an important contributor to growth, rising by 6.9% in 2025 before moderating over the following years.

Investment is projected to grow strongly by 6.0% in 2025, supported by major project pipelines and continued expansion across high-value sectors. While investment growth is expected to cool to 1.0% in 2026 before increasing to 3.0% in 2027, the Commission notes that capital spending will continue to support medium-term economic performance.

However, the report highlights emerging constraints – particularly labour shortages. Employment is forecast to grow by 3.7% in 2025, driven by continued immigration flows, though these are expected to slow due to tighter rules. Employment growth will ease to 2.9% in both 2026 and 2027, with labour shortages likely to remain a structural challenge.

Despite this, Malta’s unemployment rate is set to remain among the lowest in Europe at around 2.9%. Wage growth is expected to moderate but continue outpacing inflation, supporting household spending power.

Inflation is forecast to fall to 2.4% in 2025 before stabilising near 2% in 2026 and 2027. Energy inflation will remain contained due to government subsidies aimed at keeping retail energy prices unchanged over the forecast horizon.

On the fiscal front, Malta’s deficit is expected to continue narrowing – from 3.5% of GDP in 2024 to 3.2% in 2025, 2.8% in 2026 and 2.6% in 2027. Strong revenue performance, ongoing economic expansion and reduced capital outlays related to the national airline all contribute to this improvement. Public debt is set to stabilise at around 47.3% of GDP, one of the lowest ratios in the EU.