Fitch has revised Malta’s outlook from positive to stable, due to the impact that the COVID-19 pandemic is having on the country’s economy. The credit rating agency is also forecasting that the real GDP will contract 5.9% in 2020, due to a decrease in spending from both companies and households. On the positive side, Fitch noted the prompt reaction of the authorities in containing the spread of the pandemic and the financial support measures in favour of companies and households.
Fitch estimates the general government balance to deteriorate to a deficit of 8.2% of GDP in 2020, from a surplus of 0.8% in 2019. The deficit should partially shrink in 2021 to 5% of GDP, due to lower spending and a rebound in the economy.
The government debt is expected to increase to 55.7% of GDP in 2020, from an estimated 43.4% in 2019. Fitch projects Malta to maintain a current account surplus of 2.9% of GDP in 2020.
Credit rating agency Moody's has affirmed Malta's credit rating at A2 stable.While the government debt-to-GDP diminished from 2011 to 2019 the global health emergency will considerably slow down the growth in 2020. Nonetheless, Moody's expects the outbreak to have a limited negative impact on the country’s economy
"The stable outlook is also based on our expectation that efforts to address institutional challenges will be maintained and that systemic risks emanating from the financial sector, including those related to money laundering and the financing of terrorism, will be contained", the agency said.