Despite the pandemic, in 2020 foreign direct investment in Malta reached more than €322 million. Recently published data on Malta’s foreign direct investment by NSO shows that trust in Malta as a base of operations showed no signs of reversing.
Instead of hearing of factories closing down as had been the case in previous economic crises, we experienced factories expanding further.
Few local commentators had expected the Maltese economy would be able to withstand the economic shock of the pandemic. The prevailing narrative was that most economic growth was driven by short-term boosts and that the pandemic would show how Malta’s economic model was flawed.
Instead, the pandemic showcased the incredible resilience of the Maltese economy. Many sectors continued to expand and after a brief rise in unemployment, we are now hearing only of labour shortages. Some questioned the fact that employment rose even during the pandemic. It was all due to underground economic activity emerging so as to qualify for government handouts. Few bothered to look at the sectors driving the rise – information technology, remote gaming, professional services. All sectors where the underground economy is not an issue.
In 2020 there were inward direct investment flows of nearly a third of a billion euro. Manufacturing, transportation, accommodation and real estate saw smaller new inflows compared to 2019, but they still expanded. FDI flows in information and communication, professional, scientific and technical activities and in remote gaming were even stronger than in 2019.
Compare this situation with what had happened in 2012. Back then, Malta had had negative flows in manufacturing, in professional, scientific and technical activities and in other sectors. All in all direct investment had fallen by €88 million that year.
By the end of 2020, if one excludes the volatile financial services sector, and focuses on more longstanding sectors, such as manufacturing, the value of Foreign Direct Investment assets amounted to €4.6 billion in 2020, nearly double the amount in 2012. Growth has been consistent and resistant to economic downturns abroad in a way that was not the case before the change in administration.
The FDI results for 2020 constitute one of the strongest endorsements of the continued attractiveness of Malta as a place where to do business.