During the fourth quarter of 2025, growth in real Gross Domestic Product (GDP) accelerated when compared with the preceding quarter.
Domestic demand and net exports contributed to this growth in almost equal proportions. The pace of expansion was more than five times the euro area average.
As the level increase in GDP exceeded that in potential output, the output surplus widened.
The Bank’s Business Conditions Index remained relatively unchanged in the fourth quarter, indicating that the pace of economic activity stood slightly above its long-run average.
During the fourth quarter of 2025, the labour market continued to perform positively amid rising activity and employment rates.
The job vacancy rate rose, while the labour tightness indicator, which is the ratio of the job vacancy rate to the unemployment rate, remained elevated.
According to the Labour Force Survey, employment growth in Malta remained above that in the euro area. The unemployment rate increased but remained well below that in the euro area.
Consumer price inflation increased slightly in the fourth quarter of 2025. Annual inflation, as measured by the Harmonised Index of Consumer Prices (HICP) stood at 2.5% in December, up from 2.4% in September, while inflation excluding energy and food declined marginally to end the quarter at 2.3%.
Although headline HICP inflation exceeded that of the euro area, inflation excluding energy and food was in line with the euro area’s average.
In the fourth quarter of 2025, the general government registered a smaller deficit compared with the corresponding period a year earlier.
When measured on a four-quarter moving sum basis, the deficit-to-GDP ratio narrowed significantly when compared with the third quarter of 2025 and fell below that in the euro area.
The debt ratio was relatively unchanged from that posted a quarter earlier and stood well below the corresponding euro area average.
During the final quarter of 2025 and up to its latest interest rate setting meeting in April, the Governing Council of the European Central Bank (ECB) kept its key policy rates unchanged.
The Council reiterated that the war in the Middle East has made the outlook significantly more uncertain.
However, it is well positioned to navigate this uncertainty. Risks to euro area inflation are to the upside, while those for growth are to the downside..
The second issue of the Quarterly Review for 2026 is available on the Bank’s website.
For more recent indicators, you may consult the Economic Update.
