USA

Year to Date (YTD)

Commentary: Credit rating agency Moody’s downgraded the US credit rating by one notch from its pristine Aaa rating as the “Trump Bill” seeks to reinvigorate economic growth through rigorous tax cuts and an “America first” mantra. The bill is largely expected to increase deficit by over $2 trillion in the next decade as the US debt to GDP currently hovers around a high 124% mark. Inflation figures remained largely constant, with the headline inflation number out at 2.4% in May. The US economy also added 139K jobs, a dip from April but still above expectations. Equity markets remained largely flat as uncertainty and heightened geopolitical tensions remain at place. The S&P500 is now up just 1.6% YTD with the tech-focused NASDAQ flat.

Europe & UK

Year to Date (YTD)

Commentary: The euro area’s economic outlook remains uncertain amid ongoing trade tensions and global instability. In 2025, stronger-than-expected early activity helped offset some pressures. Over the medium term, fiscal measures, especially infrastructure and defence spending in Germany, are expected to support growth. However, US tariffs, a stronger euro, and trade uncertainty will weigh on exports and investment. Real GDP growth is projected to hover around 1% annually through 2027. Inflation is forecast to dip to 1.4% in early 2026 before returning to 2% in 2027, driven by lower energy prices and easing wage pressures. Revised projections reflect lower inflation in 2025–26 due to cheaper energy and euro appreciation. Alternative scenarios suggest easing trade tensions could boost growth, while escalating tariffs could worsen the outlook. The Eurostoxx 50 remains up 8% despite a slight May dip.

Malta

Year to Date (YTD)

Commentary: According to the latest outlook issued by the Malta Central Bank, Malta’s real GDP growth is projected to slow from 6% in 2024 to 4% in 2025, and further to 3.3% by 2027. This outlook remains broadly unchanged, with minor adjustments due to new US tariffs offset by stronger government consumption and investment. Growth will be mainly driven by domestic demand, particularly private consumption and recovering investment, while net exports will contribute positively, though less significantly. Employment growth is expected to ease from 5.1% in 2024 to 2.3% by 2027, with unemployment stabilizing at 3%. Wage growth is set to moderate, and inflation is forecast to decline to 2% by 2027. The government deficit and debt ratios are expected to narrow gradually, though fiscal risks remain tilted to the downside due to potential spending increases. The MALTEX remained up marginally YTD.