Malta’s economy is expected to grow by 3.9% in 2025, according to the International Monetary Fund’s (IMF) latest World Economic Outlook. This places Malta among the fastest-growing economies in the euro area.

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The updated forecast comes as the IMF warns of a more challenging global environment. The organisation says the global economy has entered a “new era” marked by rising trade protectionism and geopolitical tensions. It highlights recent US tariffs, introduced in early 2025 and expanded in April, as a key factor contributing to a broad slowdown in international trade and output.

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The IMF has revised global growth down to 2.8% for 2025, with trade volumes projected to rise by just 1.7%. The report also notes a modest uptick in global inflation, partly as a result of rising import costs linked to the new tariffs.

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Despite these conditions, the IMF projects inflation in Malta will remain relatively contained, with consumer prices expected to increase by 2.1% in 2025. The Fund attributes Malta’s economic momentum to domestic demand and continued growth in services.

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Last week the Finance Ministry said Malta’s service-based economy is expected to shield it from the worst effects of the global trade disruptions, given its lower dependence on goods exports.

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Malta’s outlook also coincides with a new fiscal development. On Tuesday, the Ministry for Finance and Employment announced that Malta will exit the European Union’s Excessive Deficit Procedure (EDP) two years ahead of schedule. The EDP is initiated when a member state’s budget deficit exceeds 3% of GDP. Malta was placed under the procedure in the wake of increased public spending during the COVID-19 pandemic and the subsequent energy price crisis.

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According to the Ministry, improved fiscal balances and stronger-than-expected revenue performance contributed to the early exit. The move is expected to provide greater flexibility in public finance management in the years ahead.

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With a population of around 563,000, Malta’s economic profile remains that of a small, open economy with the IMF noting that while it remains exposed to external shocks, recent indicators point to underlying economic resilience.

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The global outlook, by contrast, is clouded by what the IMF calls “geoeconomic fragmentation.” The Fund has downgraded projections for several major economies, including the United States and China, and warns that continued tariff escalation could lead to further disruptions in trade, investment, and price stability.

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The report recommends that countries maintain clear and predictable trade policies, pursue structural reforms to support productivity, and manage public finances carefully in order to safeguard medium-term stability.

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While the global environment remains uncertain, the IMF’s latest forecast suggests that Malta may continue to post solid growth in 2025, provided current conditions persist.

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Malta’s Finance Ministry confirmed yesterday that the country will exit the EU’s Excessive Deficit Procedure two years ahead of schedule due to a stronger-than-expected fiscal performance in 2024

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