Press Release
(Maltese version below)
On 15 October 2015, the Malta Fiscal Advisory Council (MFAC) presented to the Minister for Finance its assessment of the official macroeconomic forecasts for the years 2015 and 2016 prepared by the Ministry for Finance and presented in the Draft Budgetary Plan for 2016. This assessment was carried out as part of the MFAC’s functions as stipulated by the Fiscal Responsibility Act (2014).
On the basis of the updated forecasts by the Ministry, real GDP growth is expected to accelerate from the 3.5% recorded in 2014 to 4.2% in 2015, before moderating somewhat to 3.6% in 2016. The MFAC’s assessment considers such macroeconomic projections for the period 2015-2016 as plausible and within the MFAC’s endorsable range. The MFAC is satisfied that the production of the latest forecasts was based on sound methodology and incorporated all the relevant information up to the set cut-off date, while the underlying assumptions are judged to be valid.
The MFAC notes that the projected elevated economic growth rate for 2015 appears to be generally in line with the developments recorded in the first half of the year, and the continuation of this momentum over the second half of the year is therefore considered as likely, albeit subject to an element of risk. It is envisaged that this growth will be entirely supported by final domestic demand particularly gross fixed capital formation, whereas growth in exports is expected to fall short of that in imports. In view of the historical volatility of the investment component as well as on account of the significant revisions made to the investment projections from one forecast round to another, there is an element of risk to the growth forecast for 2015 should investment expenditure turn out to be less buoyant than projected, thereby impacting both the aggregate real GDP and its components. Such risks, however, appear to be contained, given that investment expenditure has already registered significant growth during the first half of 2015, supported by a number of public and private projects.
With regard to the 2016 projected real GDP growth rate, the MFAC considers it as plausible, but subject to downside risks, as its attainment depends critically on the expected performance of the external sector. The MFAC notes that while the moderate slowdown in real GDP growth being forecast by the Finance Ministry for 2016 relative to 2015 is consistent with the latest available projections by the European Commission and the Central Bank of Malta, there are divergences with regard to the drivers of growth. Indeed, unlike the said institutions, the Ministry is projecting an export led growth scenario for 2016 alongside a significant drop in gross fixed capital formation. However the MFAC acknowledges that the forecasts contained in the Draft Budgetary Plan 2016 are based on more updated information and possibly on better knowledge about specific public sector projects, thereby supporting the plausibility of these forecasts.
The MFAC finally notes that the official inflation forecasts, respectively at 1% for 2015 and 1.8% in 2016 and the projected unemployment rate, at 5.8% for 2015 and 5.6% for 2016, are also quite consistent with the latest available projections produced by the European Commission and the Central Bank of Malta. The MFAC notes that the projected pick-up in inflation is the result of the assumed increase in international oil prices, while the further decline in the unemployment rate follows the vibrant labour market.
The full report, entitled “An Assessment of the Macroeconomic Forecasts for the Maltese Economy prepared by the Ministry for Finance in October 2015”, is available on the website of the Malta Fiscal Advisory Council http://www.mfac.gov.mt
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Il-Kunsill Fiskali Konsultattiv Malti jippublika l-evalwazzjoni tat-tbassir makro-ekonomiku tal-Gvern kif ippreżentat fl-Abbozz tal-Pjan Baġitarju għall-2016
Fil-15 ta’ Ottubru 2015, il-Kunsill Fiskali Konsultattiv Malti (MFAC) ippreżenta lill-Ministru għall-Finanzi r-rapport tal-evalwazzjoni tat-tbassir makro-ekonomiku uffiċjali għas-snin 2015 u 2016 kif ippreparat mill-Ministeru għall-Finanzi u ippreżentat fl-Abbozz tal-Pjan Baġitarju għas-sena 2016. Din l-evalwazzjoni saret bħala parti mill-qadi tal-funzjonijiet li għandu l-MFAC skont l-Att dwar ir-Responsabbiltà Fiskali tal-2014.
Fuq il-bażi tat-tbassir aġġornat mill-Ministeru, it-tkabbir ekonomiku f’termini reali mistenni jaċċelera minn 3.5% kif imkejjel fis-sena 2014 għal 4.2% fis-sena 2015, qabel ma jimmodera, għal 3.6% fis-sena 2016. L-evalwazzjoni tal-MFAC jikkunsidra dawn il-projezzjonijiet makro-ekonimiċi għall-perjodu 2015-2016 bħala plawżibbli u aċċettabli għall-MFAC. L-MFAC hu sodisfatt li l-produzzjoni tal-aħħar tbassir kienet ibbażata fuq metodoloġija soda li tinkludi l-informazzjoni relevanti kollha sad-data indikata bħala aħħarija f’termini ta’ ġbir ta’ informazzjoni, filwaqt li s-suppożizzjonijiet imposti huma kkunsiddrati validi.
L-MFAC jinnota li t-tkabbir ekonomiku għoli previst għall-2015 jidher li hu ġeneralment konformi mal-iżviluppi li seħħew fl-ewwel nofs tas-sena, u t-tkomplija ta’ dan ir-rittmu għat-tieni nofs tas-sena huwa għalhekk meqjus bħala realistiku, għalkemm jibqgħu xi elementi ta’ riskju. Hu mistenni li dan it-tkabbir ikun ġej kollu kemm hu minn domanda lokali, partikolarment mill-investiment, peress li t-tkabbir fl-esportazzjoni mistenni jkun inqas minn dak fl-importazzjoni. Meta tqis il-volatilità tal-investiment matul is-snin, kif ukoll il-bidliet li seħħew fit-tbassir tal-investiment minn previżjoni għall-oħra, jibqa’ ċertu element ta’ riskju, għat-tkabbir mistenni għall-2015, jekk l-investiment ikun inqas milli mistenni, għaliex dan iħalli impatt kemm fuq il-Prodott Gross Domestiku (PGD), kif ukoll fuq il-komponenti tal-PGD. Madankollu, dan ir-riskju jidher baxx peress li l-ispiża għall-investiment diga’ rreġistrat tkabbir sostanzjali matul l-ewwel nofs ta’ l-2015, sostnuta minn numru ta’ proġetti kemm pubbliċi kif ukoll fis-settur privat.
L-MFAC jikkunsidra li t-tkabbir ekonomiku f’termini reali kif imbassar għall-2016 hu wkoll plawżibbli, imma suġġett għal numru ta’ riskji, minħabba li dan jiddependi fuq l-andament tas-settur estern tal-ekonomija biex jintlaħaq. L-MFAC jinnota li filwaqt li t-tnaqqis moderat fil-PGD f’termini reali kif imbassar mill-Ministeru għall-Finanzi għas-sena 2016, meta mqabbel mas-sena 2015, hu konsistenti ma’ l-aħħar tbassir ppublikat mill-Kummissjoni Ewropea u mill-Bank Ċentrali ta’ Malta, hemm diverġenzi fuq x’ser jikkontribwixxi għat-tkabbir matul is-sena. Għall-kuntrarju ta’ dawn l-istituzzjonijiet, il-Ministeru qed ibassar illi t-tkabbir għall-2016 ġej mill-esportazzjoni filwaqt li l-investiment mistenni jonqos b’mod sinifikanti. Madankollu, l-MFAC jirrikonoxxi li, meta mqabbla ma’ dawk tal-istituzzjonijiet l-oħra, l-istimi kif ippreżentati fl-Abbozz tal-Pjan Baġitarju 2016 huma bbażati fuq informazzjoni iktar aġġornata u possibilment iktar dettaljata fuq proġetti pubbliċi speċifiċi, u għalhekk dan isostni l-plawżibiltà tat-tbassir.
Fl-aħħar nett, l-MFAC jinnota li t-tbassir uffiċjali tal-inflazzjoni, rispettivament ta’ 1% għall- 2015 u 1.8% għall-2016, u r-rata ta’ qgħad prevista, ta’ 5.8% għall-2015 u ta’ 5.6% għall-2016, huma wkoll raġonevolment konsistenti ma’ l-aħħar tbassir tal-Kummissjoni Ewropea u tal-Bank Ċentrali ta’ Malta. L-MFAC jinnota li ż-żieda mistennija fl-inflazzjoni hi bbażata fuq is-suppożizzjoni li l-prezz internazzjonali taż-żejt jiżdied, filwaqt li t-tnaqqis mill-ġdid fir-rata ta’ qgħad, issegwi l-andament b’saħħtu fis-suq tax-xogħol.
Ir-rapport sħiħ bit-titlu ta’ ‘An Assessment of the Macroeconomic Forecasts for the Maltese Economy prepared by the Ministry for Finance in October 2015’, jinsab fuq is-sit elettroniku tal-Kunsill Fiskali Konsultattiv Malti http://www.mfac.gov.mt.