Defying expectations

The Maltese economy grows at one-and-a-half times of the projected rate.

In the first three quarters of 2023 economic activity was 6.5% higher than that recorded in the same months a year earlier. This is almost one-and-a-half times the forecast of around 4% projected by international institutions such as the European Commission and the International Monetary Fund (IMF).

According to the National Statistics Office (NSO), the Maltese economy grew by 6.4% in the first quarter of the year, followed by growth of 5.9% in the second quarter and 7.1% in the third quarter of the year. These rates are a major revision from the first estimates that had been published. In fact, the first estimate of Q1 growth had been 3.1%, while that for the second quarter had been 3.9%.

Growth rate

 2023 January to March2023 April to June2023 July to September
Current estimate6.4%5.9%7.1%
First estimate3.1%3.9% 

When looking at those sectors that are driving economic growth, it turns out that nearly 40% of growth comes from professional and administrative services. A further 40% comes from retail, catering, and financial services. There has also been a strong contribution from remote gaming and industry. In contrast, activity in the construction sector has decreased. 

Economic growth is buoyed by higher private consumption. In fact, around 60% of economic growth was due to higher consumption by households. This reflects the fact that the compensation of employees has reached a new historical high of almost €6 billion during the first nine months of this year. This is half a billion euro higher than last year, marking an increase of 10%.

In addition to buoyant consumption there has also been an improvement in our country’s balance of payments. A large increase in exports of more than one-and-a-half billion euro, more than offset an increase in imports.

Investment also remained sustained, at €2.1 billion, or 8% more than in 2019, before the pandemic. In contrast, in the four years after the 2008 recession, investment had remained very sluggish. This time, backed up by Government’s support on energy prices, businesses are expanding. In fact, profits during the first nine months of the year were up by 13%.

When comparing economic activity in the first nine months of 2023 with that before the pandemic, Malta’s GDP is almost 20% larger, having risen by nearly two billion euro. Investment rose by almost €160 million, while net exports grew by more than six hundred million euro. Government consumption increased by €410 million, while private consumption grew by more than one and a half times this result.

The increase in private consumption reflects the sharp increase in employment in recent years, as well as the improvement in wages. In the first nine months of the year workers’ income was almost one-and-a-half billion euros more than it was in 2019.

The fastest growing sectors over the past four years have been professional services, with an increase of almost half a billion euros, while gaming, financial services, and IT have grown by more than €800 million.

With the momentum of the Maltese economy not slackening, the prospects of further revisions to economic growth seem quite likely.

Increase in economic activity (€ million)

 Compared to the first nine months of 2022  Compared to the first nine months of 2019  
Gross Domestic Product+710+1,842
Household consumption+385+670
Income of workers+539+1,362
Professional and administrative services+238+484
Financial services, gaming, and information technology+207+824

Photo: Polina Kovaleva:

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