VALLETTA (MALTA) (ITALPRESS/MNA) – Malta’s greatest climate-related economic risks may come from Italy rather than rising temperatures at home, according to a new study by the Central Bank of Malta.

The research finds that Malta’s close trade and energy links with Italy create a “climate bridge”, allowing heatwaves, droughts and other weather shocks to spill over into the Maltese economy.

Italy supplies between 41% and 56% of Malta’s food imports, up to 60% of agricultural products, while Malta’s electricity and gas supply is largely connected to Italy through the Malta-Sicily interconnector.

The study shows that unusually high summer temperatures in Italy increase production costs and energy demand, driving up import prices and contributing to higher inflation in Malta.

It also found that Maltese services inflation, particularly in the catering and accommodation sectors, can exceed inflation recorded in Italy because of the island’s reliance on imported food and energy.

Droughts during key harvest periods in Italy have an immediate impact on Malta’s food sector, with processed food prices closely tracking increases in Italian inflation.

Beyond inflation, the research identifies a decline in Malta’s food manufacturing output following winter temperature anomalies in Italy, highlighting the impact of foreign climate shocks on domestic production.

Although climate-related disruptions can affect Italian energy production, government subsidies and increased local electricity generation help cushion Maltese consumers from direct price increases.

The study concludes that Malta’s economic resilience is closely tied to climate conditions in Italy and urges policymakers to monitor climate risks affecting key foreign suppliers as weather extremes become more frequent.

– photo IPA Agency –

(ITALPRESS).

Source: medNews