Gender

Malta's economy has grown rapidly over the past decade, with per capita income nearly doubling since 2013. Growth averaged close to 7 percent annually, led by labor-intensive tourism, online gaming, and professional services, and was supported by inflows of foreign workers. Labor-driven growth supported by immigration, is expected to continue in the medium term but slow in the longer term as Malta, an island economy with the highest population density in the EU, cannot sustain further substantial population and labor force growth through immigration. Without adequate policy and structural reform measures, the inevitable deceleration in labor force growth would weigh on potential output and limit actual growth.

Selected Issues

Economic growth slowed to 6.3 percent in 2024 (compared to 6.8 percent in 2023), reflecting a sluggish extractive sector and is projected to slow further to 4.2 percent in 2025 due to an expected contraction in the extractive sector and a slowdown in the non-extractive sector. Inflation is expected to remain contained. After widening in 2024, the current account is projected to narrow in 2025, mainly reflecting a lower trade deficit due to favorable terms of trade and reduced imports of capital goods and services following the completion of the first phase of the Greater Tortue Ahmeyim (GTA) project construction. Recent cuts in Official Development Assistance (ODA) have been partly offset for 2025 through reallocations from various donors, but the sustainability of these temporary measures remains uncertain. This extends downside risks into 2026, with potential fiscal implications. Persistent challenges, such as inadequate infrastructure, governance weaknesses, high vulnerability to external shocks, and limited economic diversification, continue to constrain Mauritania’s long-term economic development. Additionally, frequent and severe climate-related disasters create large adaptation needs.

Since oil was discovered in the 1960s, Oman’s economy and living standards have improved significantly. Yet, it has also created a vulnerable economic structure, with economic growth and external and fiscal balances being highly sensitive to oil price swings. While current diversification efforts have laid important groundwork, further progress is needed to ensure economic resilience to oil price volatility. Building a competitive nonhydrocarbon export sector is essential, as nonhydrocarbon output consists primarily of non-tradables, particularly of low-added value sectors requiring low-skilled labor, with limited productivity gains, foreign currency receipts, and employment potential. Accelerating structural reforms alongside well-targeted state support will be key to enhance product sophistication and deepen export diversification beyond oil and gas. In particular, our empirical analysis indicates that improvements in government effectiveness and logistics performance could significantly raise nonhydrocarbon exports.

Indonesia has been pursuing a broad push towards greater trade openness with regional and global partners, seeking to leverage external demand to reach high-income status by 2045. This welcome and timely effort comes amid ongoing trade policy shocks. Our analysis suggests that deeper trade integration, focusing on reducing non-tariff barriers, along with complementary structural reforms, can generate significant GDP gains for Indonesia. These gains can come from unilateral actions on reducing non-tariff barriers affecting imports, which would be amplified by increasing market access in the context of trade agreements with major partners. Alongside trade policy, structural reforms in other areas—such as human capital and logistics—can further enhance trade integration. These reforms can reduce trade costs on their own, while also complement trade policy by helping Indonesia to broaden comparative advantage across sectors. Such an ambitious trade liberalization and structural reform program could make Indonesia ‘open for business’ amid shifting global supply chains; the resulting GVC-integration, supported by FDI, could drive gains beyond this paper’s estimates.

North Africa stands at a pivotal crossroads—geographically and economically—between Europe’s industrial demand and Africa’s demographic dynamism. In today’s rapidly shifting global landscape, North Africa has a timely opportunity to position itself as a strategic connector of continents. Geopolitical shifts and ongoing diversification efforts are creating new momentum to deepen economic linkages between North Africa, Europe, and sub-Saharan Africa, build greater resilience, and foster shared growth across all three regions. Empirical evidence shows that deeper regional linkages could significantly boost trade, investment, and growth, with gains amplified by improvements in logistics, the business environment, and energy cooperation. North Africa’s energy potential—spanning hydrocarbons, solar, wind, and green hydrogen—positions the region to support Europe’s clean energy transition and sub Saharan Africa’s electricity needs, while fostering technology transfer. Realizing this potential will require coordinated reforms, upgraded infrastructure, and strong collaboration across North Africa, Europe, and sub-Saharan Africa.

Aside from horizontal structural reforms, raising public investment should be a key pillar of Indonesia’s pursuit of its Vision 2045. However, this must be complemented by policies aimed at enhancing the efficiency of public investment, thereby maximizing its impact. Mobilizing additional revenues will create the fiscal space needed to scale up the public investment while maintaining compliance with Indonesia’s longstanding fiscal rules.

For Poland, Russia’s war in Ukraine represented a major downward shock to output and upward shock to inflation. However, the strong real wage growth and fiscal stimulus of recent years have driven a nearly full closing of the output gap. In addition, inflation has returned to target due to both appropriately tight monetary policy and a subsiding of external supply shocks. The main vulnerability that emerged from recent years is an increase in the fiscal deficit to a projected 7 percent of GDP in 2025. This has raised public debt to 59 percent of GDP, a 10 percentage point increase in two years.

Uganda’s post-pandemic economic performance has been robust with broad-based growth, contained inflation, and an improving external position supported by coffee exports and portfolio inflows. Foreign exchange (FX) reserves have also increased significantly in 2025 amid a favorable external environment. Nonetheless, fiscal policy space remains constrained, with rising vulnerabilities associated with widening fiscal deficits and a high debt servicing burden.