Why is Malta’s Economy Fast Growing?
Malta’s economy is currently thriving and is even surpassing other EU member states. Malta showed high resilience in the latest financial crisis, thanks to its economic and innovation-driven structures as stated by the World Economic Forum.
The latest economic forecast for Malta issued by the European Commission shows that the Maltese economy reported a 6.9% growth in 2022, placing Malta in second place amongst all EU state members.
The EU is forecasting that the GDP there will be further growth during this year and the next which such growth expected to reach 3.9% in 2023 and 4.1% in 2024. The key drivers for Malta in reassuring this economic consistency and growth are mainly in relation to the following sectors: tourism, real estate, financial services, iGaming and manufacturing. In addition to the aforementioned sectors, Malta’s geographical position is also a factor which contributes to its growth.
Below we will take a deeper dive into the understanding of these sectors to identify their strengths which lead to the island’s outstanding economic performances in recent years.
What are the key contributing sectors to the island's economy?
Geographical Position
Malta is found at the very centre of the Mediterranean Sea which makes part of the European continent. The geo-positioning and trading elements are fundamental considerations that heighten key sectors contributing to Malta’s economy.
Tourism
Tourism is one of the main contributors to the Maltese GDP and represents a strong source of income. Malta has a thriving tourism industry that attracts an increasing number of visitors each year. The country’s historical and cultural heritage, scenic landscapes, and fair climate which is boasted with close-to-constant sunny days make it an appealing destination for European tourists who have beaches and med-lifestyle on top of their list, as well as non-European to discover the highlights of Europe in one small archipelago. Travelers can experience the warm hospitality that the locals are well known for as well as their diversified cuisine, accommodation, and entertainment that holistically contributes to the economy.
Financial services
Malta is considered as one of the most reputable financial services hubs within the European Union (EU). The country can offer a favourable business environment that includes a well-regulated financial services sector, competitive corporate tax rates, and access to EU markets. A good number of international companies, particularly those in the fintech and online gaming sectors, have chosen Malta to relocate their business or open new ventures. These sectors gave a significant boost to the island’s economy while presenting new employment opportunities.
Information technology and digital industries
Malta has been actively promoting the growth of its information technology and digital sectors. The government has implemented initiatives to attract tech companies and startups such as the Malta Start-up Residence Programme, aiming to create a conducive environment for innovation and entrepreneurship.
Manufacturing and export-oriented industries
Malta has developed a strong manufacturing sector, particularly in areas such as pharmaceuticals, electronics, and precision engineering. The country benefits from its strategic location and membership in the EU, allowing businesses to access the wider European market easily. Export-oriented industries have contributed to economic growth by generating revenue and creating job opportunities.
Real Estate
In recent years, there has been significant growth and expansion in the property market, particularly driven by demand from both local and international buyers. This growth can be attributed to several factors, including foreign investment, tourism, and the country's economic development.
The real estate sector plays a crucial role in Malta's economy because it primarily generates employment opportunities in various sectors, including architecture, engineering, and construction while stimulating other industries such as retail, hospitality, and services. The said sector also supports infrastructure development. Additionally, it helps to increase government revenue through fees and taxes associated with property transactions, even though the government has in place different schemes to assist buyers to go into the real estate market as well as assist first-time buyers to own their first home.
The Maltese property market has been on steady growth in the last decade, with property prices increasing at 12% pre-pandemic and kept on rising through the following years. The number of final residential deeds amounted to 918 during April 2023, and 1,061 promise of residential sale agreements were registered; an increase of 45 agreements over the same period last year.
Further to the internal transactions that happen from locals to locals, foreign investment in Maltese real estate has been significant to the island’s general economic growth. A substantial amount of property deeds are incoming through individuals seeking to obtain citizenship or residency by investment. This influx of foreign capital not only supports the real estate market but also has positive effects on other sectors of the economy, such as tourism, retail, and hospitality.
Malta is built on a solid infrastructure that adapted all the necessary changes and improvements required to ensure solid economic growth, hence why the government keeps these sectors at the forefront of its legislature and yearly budget announcements.
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