The European Commission announced on Thursday it will surpass economic growth expectations for this year, and predicted robust growth in 2018.
The pace is the quickest in a decade, and the European Commission said it anticipates continued growth of 2.1 percent next year and almost 2 percent in 2019.
United Kingdom growth slowed down this year - to 1.5 percent from 2.3 percent in 2015 and 1.8 percent in 2016 - because higher prices led to lower consumption. The EC has forecast growth of 1.6 percent for Greece this year, with rates of 2.5 percent expected in both 2018 and 2019.
The Autumn 2017 Economic Forecast put the UK's slow growth down to inflation caused by the collapse in the pound following last year's vote for Brexit, which had constrained private spending.
"The external sector is expected to remain solid, supported by an improved external environment, especially in the euro area", the Commission said in its section on Luxembourg.
However, in view of Malta's openness to trade (nominal exports and imports combined to reach 270% of GDP in 2016) any volatility in Malta's main exporting sectors would have a disproportionately large impact on real GDP growth. Moreover, structural convergence and the strengthening of the euro area are necessary to make it more resilient to future shocks and to turn it into a true motor of shared prosperity.
"After five years of moderate recovery, European growth has now accelerated", EU Economy Commissioner Pierre Moscovici said. The economy would slow even further to 1.3 percent in 2018, followed by 1.1 percent in 2019.
With overall European Union growth now slated at 2.3 percent for 2017, followed by 2.1 percent, the worst appears to be long over. The unemployment rate is projected to fall to 6.4% in 2017 and to gradually reach 5.7% in 2019.The Commission's assessment of the general government budget coincides with the fiscal policy objectives set out in the three-year budgetary projections 2018-2020, namely: a balanced budget in 2017 and 2018 and a surplus in 2019. By contrast, diminishing uncertainty and improving sentiment in Europe could lead to stronger-than-forecast growth, as could stronger growth in the rest of the world.
Despite this growth, the Commission states in its report that the Croatian GDP would return to the level before the crisis in two years.
The Commission estimates that the budget deficit this year and next year will be 0.9 percent of GDP, while in 2019 it will be 0.7 percent of GDP.
The Commission noted the the prospect of Brexit "is already having an impact on economic activity" and insisted that its forecasts for 2019 where based "on a purely technical assumption of status quo in terms of trading relations between the EU-27 and the United Kingdom". "This is for forecasting purposes only and has no bearing on the talks underway in the context of the Article 50 process", the European Commission's forecasts note.