Moody’s confirm stable outlook for Malta.

Credit rating agency Moody’s has confirmed Malta’s outlook as stable in its annual update, saying that its A1 government ratings reflect the country's high economic resiliency and its very high financial robustness.

“The country's primary challenge is to maintain economic competitiveness over the longer term, building on and securing its success in attracting investment in fields such as remote gaming, financial services, call centres and pharmaceuticals,” Moody's Investors Service said.

"Malta has made substantial progress towards real convergence with the rest of the eurozone," said report author Dietmar Hornung, noting that there was a clear need for Malta to address its structural economic problems if it is to continue its real convergence with core eurozone countries and remain competitive over the longer term.

"Although competitiveness in some traditional export industries is decreasing as a result of real income convergence, market liberalisation and EU membership are facilitating new export-oriented activities."

Key to addressing the competitiveness issue will be making progress on structural reforms associated with the EU's Lisbon Agenda. He said the areas of weakness include an oversized and inefficient public sector, over-reliance on public subsidies, insufficient spending on research and development, and a low female participation in the labour force, problems which will be exacerbated in coming years due to the ageing population."

Moody's considers that Malta's susceptibility to event risk is very low, particularly since its adoption of the euro effectively eliminated the risk of an external financial crisis.

“Malta's banks also weathered the initial stage of the crisis relatively unscathed, but their concentration risk is considerable, given their high exposure to the real estate sector,” the report said.

Source "di-ve"