Across the EU, economic growth amounted to 3.9% during the third quarter of 2021. However, the Maltese economy fared much better than this, with our economy registering the highest growth rate observed across the Union. At 9.7%, the Maltese economy growth rate was two-and-a-half times the EU’s growth rate.
If instead of focusing on just the third quarter of the year, one looks at the whole nine months of 2021 Malta’s GDP in nominal terms reached €10.6 billion. This is 9.2% more than the same period of 2020. More important is the fact that for the first time this is a level of economic output which is larger than the pre-pandemic level, which for the first nine months of 2019 was €10.5 billion.
International agencies had previously forecast that our country would have the fastest rate of economic growth in the EU, but the forecast was that this would happen in 2022, and not this year. Moreover, forecasters had predicted that Malta would regain its pre-pandemic level of activity by the middle of next year. Instead, this happened nine months earlier.
Malta had to regain its pre-pandemic level of activity by mid next year. Instead, this happened 9 months earlier.
The data show that this is happening despite that activity in the tourism, transport and retail sectors is still a quarter below its pre-pandemic levels. By contrast, the information and communications sector and remote gaming are a quarter larger than they were in 2019. In addition, the financial sector, construction, and manufacturing are more than 10% larger than they were before the onset of the pandemic. This shows how broad-based the recovery is, spanning both new digital sectors and more traditional sources of economic growth.
New record public and private investment
One of the most impressive developments is that in the first nine months of the year, Malta’s private and public investment reached a new record of more than €2.6 billion. This is a third of a billion euros higher than the amount of investment observed before the pandemic. Such a strong vote of confidence in our economy suggests that economic growth in future years will continue to accelerate to new highs.
Against all expectations, employment income has remained very resilient throughout the pandemic. So much so that workers’ incomes in the first nine months of the year reached a record €4.9 billion. This is half a billion euros more than the amount earned before the pandemic. The strength of the labour market is a key factor driving forwards domestic demand.
At the same time, business profits reached €5.1 billion, slightly exceeding the pre-pandemic level for the first time. The same happened to exports, which reached €14.9 billion, against €14.8 billion in the first nine months of 2019.
The picture that emerges from macroeconomic data is one of a dynamic economy that has adjusted to the shock of the pandemic and deployed resources flexibly to ensure fast growth in several sectors, while retaining intact the productive capacity of sectors hard hit by the pandemic.
The implementation of Budget 2022, together with the deployment of an unprecedented amount of EU funds will consolidate the gains made in recent months, and contribute to further expand the Maltese economy over the next few years.
