Economic development is critical factor that drives overall economic growth of the country. The Maltese Islands have maintained good economical relations with the rest of Europe. In terms of real GDP growth, Malta has been outperforming European Union Since 2007. Over the recent years, government has succeeded at narrowing the gap between public revenue and expenditure. Its average real GDP growth was above 7 percent in 2013-2018. Malta is considered as innovation driven economy.
Economy of Malta is mainly services based economy. Maltese Economy is classified as an advanced economy by IMF and high income country by World-Bank. After joining the EU saw economic sectors increasing their value added by €1.4 billion in Malta’s Economy.
Malta has demonstrated a clear strategy for sustainable economic growth by identifying the key sectors contributing to the Economy. These sectors includes but not limited to : Information and Communication Sector, Tourism, Construction, Financial services.
Focus on Service Sector :
Malta’s economy is almost made up of small businesses. Over the recent years, importance of traditional sectors has shrunk and new ones have emerged to take their place. Malta has become a leader in export of services. Service sector of Malta continues to grow, with sustained growth in the all service sectors.
Labour Market :
The Labour market of Malta has been performing exceptionally well in recent years. The main reason behind this was a strong labour market reforms. Main objective of these reforms was incentivising employment through different policy implementation. Also, female participation rate in the Labour force also increased. During the Covid-19 first wave, Unemployment rose, but due to supportive fiscal measures, unemployment has also been declining.
Robust Banking System :
Banking systems are considered as a backbone of any country’s Economy. Economics condition of any country can be measured by its Banking sector. Maltese banking sector has been considered as prudent. Banks in Malta are well capitalised, liquidity is ample and profitability is healthy. This helped to limit risk exposure and maintain profitability.
Construction sector is one of the most important sectors behind Malta’s Economic boom. In 2020 the value added of the construction sector stood at €494 million which shows the contribution of this sector to overall economic growth.
Trade and Investment :
Trade and Investment are important parameters of Maltese Economy. Over the years, Malta has secured huge Foreign Direct Investment( FDI ) in Wide range of Industries. Among all, finance and Insurance are the dominant sectors for FDI. Aiming for Best :
Growth in Value Added by top five sectors in prices ( €Millions )
|Total Value Added||1428||3616|
|Information and Communication||170||818|
|Professional, Scientific and Technical Activities||207||597|
|Advertising and Market Research||35||293|
Aiming for the Best :
Over the past years, Malta has adapted to change in Economic circumstances and successfully maintaining their competitive position at International level. According to IMF prediction, the government deficit would decline more sharply in 2021, reaching 10.0% of GDP, before narrowing to 5.6% in 2022 and 2023, while the government debt-to-GDP ratio would rise to 68.2% by then.
Despite the global economic crisis in 2008 and 2020, Malta has been able to maintain the healthy economic Growth. This small island has now positioned themselves as a Key hub for knowledge and growth in European Union.