Gozo’s economy and the pandemic

While joining European Union membership had a significant positive impact on the Maltese economy, for many years the relative prosperity of Gozo declined. Official data shows that in the immediate aftermath, Gozo’s GDP per capita as a proportion of Malta’s GDP fell from 64% to 58%. After an increase in one year, in subsequent years the downward trend resumed such that by 2012 the sister island was still mired at 58% of Malta’s GDP per capita.

For the first half of the post-2013 administration, the situation did not change much, but then as from 2016 there has been a clear inversion of trend. As a result, pre-pandemic, Gozo achieved its highest level of GDP per capita since EU accession, at 65%. While in 2012, the GDP generated on the island of Gozo grew by only 3.1% compared to growth of 6.5% in Malta, or by less than half; growth in Gozo has exceeded that in Malta for three years in a row.

Besides this acceleration, official data indicates that the economy diversified greatly. For instance, the dependence of the Gozitan economy on public administration, health and education decreased from 28% in 2012 to 24% in 2019, while that on professional services nearly tripled.

Between 2012 and 2019, the number of Gozitan residents in employment increased by nearly 5,200, or by around 14 every week. This is more than double the increase observed pre-2013. Most of this increase was in jobs on the island of Gozo itself. In fact, between 2012 and 2019, the number of jobs in Gozo increased by 3,750, or by 10 every week, as against 2 every week pre-2013. Moreover, the proportion of Gozitans working in the private sector has risen from 54% in 2010 to 62% in 2019.

The economic transformation of Gozo pre-pandemic proved to be vital. Had the Gozitan economy remained mired in its 2012 state, the pandemic would probably have caused irreparable damage on the Gozitan society. In 2012, the number of Gozitans registering for work stood at 750, or nearly four times the current number. The initial shock of the pandemic would have led to the number nearing 1500. Moreover, pre-2013 Gozo was ill-equipped to face the type of economic shock we faced in 2020, as it depended much more on sectors where telework was impossible or restricted. Whereas financial services, information and communications and professional services generated €28 million in 2012 in Gozo, the number rose to €101 million just before the pandemic. Without these sectors, the pandemic would have had a devastating impact.

Instead, Jobsplus statistics indicate that by the end of October 2020, there were 13,932 full-time workers in Gozothe highest figure ever recorded.

According to Jobsplus figures, the number of full-time workers in Gozo only decreased in April 2020. Moreover, since the announcement of the economic regeneration plan last June, the number of Gozitan residents working full-time has increased by 2%.

This means that in every two days in this period, three Gozitan residents have found a full-time job, despite the pandemic.

The chart below shows that between May 2020 and March 2021 the number of Gozitans registering for work decreased from 315 to 179, or by 43%. This means that almost all Gozitans who had lost their jobs following the pandemic, are now no longer registering for work. This, TheJournal.mt understands, is a much faster pace of recovery than observed in Malta.

With the tourist season fast approaching, and the relaxation of measures, the Gozitan economy can truly look forward to the return of the pre-pandemic dynamism. The launch of the voucher system will serve as another important injection. Last year, data compiled by the Ministry for the Economy indicated that 67% of all revenue for restaurants and outlets in Gozo was from redeemed vouchers, as against 26% in Malta. This resulted in an implied multiplier effect of 2.5 in Gozo, as against less than 2 in Malta.

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