IMF forecasts economic growth; measures during Covid have avoided redundancies and businesses from going bankrupt
In a report about Malta published by the International Monetary Fund, it was stated that the fiscal measures taken over the last few months because of Covid-19 have cushioned the considerable impact which the pandemic has had on the Maltese economy, especially on tourism. Initiatives which have helped families, businesses and the health care system.
The IMF report says that the Maltese economy has been through its worst recession in decades due to Covid 19. In fact, in 2020 tourism decreased by more than 25% from the pre-Covid statistics while the economy decreased by more than 7%. However, due to the measures taken, staff redundancies and bankruptcies of businesses and enterprises were avoided.
The experts at IMF also say that the efficient vaccination process has helped for tourism to reopen for summer and thanks to this, the economy is expected to recover well. In fact, in the first three months of this year, production increased by almost 2% while consumer and business confidence once again reached the levels which we had before the pandemic.
The IMF is predicting that this year the economy will grow by around 5.75% while it should reach 6% by next year.
Despite this, the uncertainty will remain, with the IMF saying that in the near future, decisions need to be taken to gradually adjust the supportive measures taken during the pandemic such as the wage supplement, and in their place there should be initiatives to facilitate investment and growth. According to the IMF these can include tax credits and subsidised loans for businesses.
The IMF also indicated other challenges for Malta including the need to strengthen the fight against money-laundering and financial terrorism, as well as strengthening economic resilience and sustainability through structural reforms. It said that the Government should continue following the recommendations of the Venice Commission and GRECO to increase the efficiency of the judicial system.
In its report, the IMF stressed the need for digital transformation and for more innovation, which can be achieved more quickly through European Funds from the Recovery and Resilience Facility.