Economic and Political Overview

flag Malta Malta: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

 

Economic Indicators

Malta is considered a high-income country and an innovation-driven economy. Thanks to its sound financial foundations, large infrastructure projects, and buoyant domestic demand, the country emerged from the euro area crisis better than most EU Member States, registering one of the highest real GDP growth rates in recent years. Nevertheless, Malta’s economy relies heavily on the tourism sector and international trade and thus is sensitive to its external environment. Between 2014 and 2023, growth averaged 6.75%, the second-highest rate in Europe. Output growth is expected to slow from 7.5% in 2023 to 5% in 2024 and 4% in 2025, still among the highest in Europe. Over the medium term, Malta’s economy is projected to continue outperforming other European countries, although structural constraints will limit growth potential. The IMF estimates medium-term growth at 4%, well above the EU average but below the pre-pandemic average. This reflects lower global growth prospects and the maturing of the gaming sector, which had previously driven Malta’s growth. Growth in labour-intensive industries, particularly tourism, may also slow as the authorities adopt a more targeted immigration policy.

Malta’s public finances have been significantly consolidated in recent years, with the government budget turning positive. However, in the last few years, national authorities had to deploy a series of measures to mitigate the effects of the pandemic and high energy and food prices, resulting in an increase in budget deficits (4.1% in 2023 and 4.6% last year, as per the IMF). The 2025 budget aims to reduce the fiscal deficit to 4% of GDP, with lower revenue offset by reduced spending as a share of GDP. Key measures include: a projected decline in income tax revenue by about ½% of GDP due to an upward adjustment of personal income tax brackets for inflation; a decrease in capital and other current revenues; a reduction in employee compensation following one-off retroactive payments related to recent public wage settlements; and a decline in subsidies, including energy, due to lower global energy prices despite fixed retail energy prices. Capital spending is also expected to temporarily decrease due to lower EU fund disbursements. Similarly, the debt-to-GDP ratio increased to 47.7% in 2024 from 47.3% one year earlier and is projected to follow an upward trend over the forecast horizon, landing at 48.7% by 2026 (IMF), as sizeable fiscal deficits should be partially offset by continued strong nominal GDP growth. While goods inflation has dropped below 2% in 2024, inflationary pressures persist in services, particularly in transport and tourism-related sectors where demand remains strong. The rate is expected to stabilize around 2% by mid-2025 (IMF).

Unemployment in Malta continues to be among the lowest in the EU, with a continuous decrease in unemployment for all age groups and categories in recent years. According to the EU Commission, employment grew by 4.3% in 2024, driven by high immigration flows to address the intense labour and skills shortages in the domestic market. While employment growth is expected to decelerate, it will remain strong at 3.1% in 2025 and 2.8% in 2026. The unemployment rate stayed low at 3.2% in 2024 and is projected to drop marginally to 3% by 2026. However, high employment growth in low-paid sectors is expected to keep nominal wage growth per employee modest throughout the forecast period, rising slightly above projected inflation. Overall, the country's GDP per capita (PPP) was estimated at USD 72,941 in 2024 by the IMF, above the EU average. Nevertheless, 19.8% of the Maltese population was at risk of poverty and social exclusion in 2023, according to the latest data by Eurostat.

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 22.3424.4026.2627.8929.41
GDP (Constant Prices, Annual % Change) 7.55.04.03.53.5
GDP per Capita (USD) 41,20544,14046,64448,64450,375
General Government Balance (in % of GDP) -4.1-4.6-4.1-3.3-3.0
General Government Gross Debt (in % of GDP) 47.347.748.248.749.1
Inflation Rate (%) 5.62.72.52.22.1
Unemployment Rate (% of the Labour Force) 3.13.03.03.03.0
Current Account (billions USD) 0.200.290.610.700.75
Current Account (in % of GDP) 0.91.22.32.52.6

Source: IMF – World Economic Outlook Database , Latest available data

Note: (e) Estimated Data

Main Sectors of Industry

Malta, the smallest economy in the Eurozone, boasts one of the most skilled, less expensive, flexible, and multilingual labour forces in Europe. Its economy is highly industrialized and service-based, while the agricultural sector only represents 0.7% of the GDP and employs around 1.1% of the workforce (World Bank, latest data available). According to the latest Census of Agriculture, in the period 2010-2020, the number of agricultural holdings decreased by 14.8%, to 10,449 (of which 41.4% produce solely for their own consumption). Malta produces less than a quarter of its food needs and has limited freshwater supplies and scarce energy sources; the main crops being potatoes, green peppers, grapes, cauliflower, tomatoes, wheat, barley, and citrus. In 2023, the local agricultural sector's output grew by 2.4% compared to the previous year, reaching EUR 138.7 million. The sector's intermediate consumption, which includes most expenses incurred during the production processes, rose by 3.2%, totalling EUR 87.2 million in 2023. The gross value added of the agricultural sector increased by 1.0% over the previous year, reaching EUR 51.6 million (data NSO).

The industrial sector employs 17.6% of the workforce and represents 11.7% of the GDP. Malta does not have any mineral or energy reserves and is thus completely dependent on imports in this field. Its industrial sector is primarily based on manufacturing, especially microchips and pharmaceutical products. Malta's chemicals industry, although smaller in scale compared to larger manufacturing hubs, plays a crucial role in the country's economy and supports several other sectors, including pharmaceuticals, construction, and manufacturing. The World Bank estimates that the manufacturing sector accounts for around 6% of GDP.

Malta has put a lot of hard work into promoting its services and succeeded in becoming one of the main service centres in the Mediterranean region. Nowadays, the tertiary sector represents 80.6% of the GDP and employs 81.3% of the workforce. The financial sector is the most important, managing assets equivalent to more than 500% of GDP and contributing about 15% of public revenues. Malta was the first EU state to regulate the online gaming industry and has become a significant iGaming hub in the region. The tourism sector is the economic engine of the country, and its direct contribution to GDP (around 15%) is among the highest in the EU. The sector was strongly affected by the COVID-19 crisis, but it has recovered: in 2024, the country welcomed a record number of inbound tourists (3.56 million), with a total expenditure of EUR 3.3 billion (up by 23.1% y-o-y – data NSO). Over the past three decades, Malta's banking sector has expanded from four retail banks to 21 licensed banks by the end of 2023, with only three being Maltese majority-owned. The others are owned by entities from various EU and non-EU countries, including Austria, Belgium, Greece, Kuwait, Qatar, Turkey, and the UK. Over 60% of the sector’s assets, totalling around EUR 46 billion, are foreign-owned. Six core domestic banks hold assets worth EUR 32.8 billion, representing 169% of Malta’s GDP, and employ 81% of the sector’s workforce, around 5,532 people. Two of these banks dominate the local market, controlling 64% of the assets (data European Banking Federation).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 1.1 17.6 81.3
Value Added (in % of GDP) 0.7 11.7 80.6
Value Added (Annual % Change) -9.5 5.3 6.6

Source: World Bank - Latest available data.

 

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Monetary Indicators 20162017201820192020
Euro (EUR) - Average Annual Exchange Rate For 1 MUR 0.030.030.020.030.02

Source: World Bank - Latest available data.

 
 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
70,2/100
World Rank:
36
Regional Rank:
21

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

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Foreign Trade in Figures

Centrally located in the Mediterranean, Malta has long portrayed itself as a bridge between Europe and North Africa. Its economy relies heavily on foreign trade, principally with Europe. International trade represents 227% of the GDP (World Bank, latest data available), one of the highest ratios in the world. Malta mainly exports machinery and transport equipment (31.1%), mineral fuels, lubricants and related materials (29.8%), miscellaneous manufactured articles (15.5%), chemicals (11.6%), and food (7.0%); whereas imports are led by machinery and transport equipment (36.5%), mineral fuels, lubricants and related materials (23.8%), food (10.4%), chemicals (10.0%), and miscellaneous manufactured articles (9.3% - data NSO, 2023).

Malta’s main import partners are Italy (19.8%), Germany (7.8%), France (7.8%), the UK (6.2%), Spain (5.6%), and the Netherlands (4.7%), with exports directed mostly towards Germany (18.7%), Italy (3.7%), Hong Kong (3.2%), the UK (2.2%), and Spain (1.6%). The majority of imports, accounting for 55.2%, originated from the European Union, with an additional 19.9% sourced from Asia. Likewise, exports were primarily aimed at the European Union, constituting 37.1%, while Asia received 16.9% (data NSO 2023).

The country has a structural trade deficit in terms of merchandise: in 2023, the deficit narrowed by EUR 779.3 million compared to 2022, reaching EUR 4,061.2 million. Imports stood at EUR 8,577.5 million whereas exports reached EUR 4,516.3 million, representing decreases of EUR 934.3 million and EUR 155.0 million, respectively (table 1). Lower imports were mainly recorded in mineral fuels, lubricants and related materials (EUR 527.5 million), machinery and transport equipment (EUR 459.8 million), and chemicals (EUR 66.1 million), partly offset by increases in food (EUR 86.4 million) and miscellaneous manufactured articles (EUR 40.8 million). On the exports side, the main decreases were registered in mineral fuels, lubricants and related materials (EUR 176.9 million), food (EUR 73.6 million), and chemicals (EUR 47.1 million). These were partly offset by an increase in machinery and transport equipment (EUR 153.4 million – data NSO). On the other hand, the country is a net exporter of services (USD 24.8 billion in exports against USD 18.9 billion in imports in 2023, WTO).
According to preliminary figures from the NSO, the deficit in 2024 widened by EUR 536.3 million compared to the same period in 2023, reaching EUR 4,634.2 million. Imports totalled EUR 9,743.5 million, while exports amounted to EUR 5,109.3 million, reflecting increases of EUR 980.6 million and EUR 444.3 million, respectively (Table 1). The rise in imports was mainly due to higher purchases of Mineral fuels, lubricants, and related materials (EUR 656.9 million) and Machinery and transport equipment (EUR 317.4 million). On the export side, increases were primarily seen in Mineral fuels, lubricants, and related materials (EUR 296.9 million), Chemicals (EUR 80.0 million), and Miscellaneous transactions and commodities (EUR 53.1 million).

 
Foreign Trade Indicators 20192020202120222023
Imports of Goods (million USD) 7,3885,7187,1338,5198,105
Exports of Goods (million USD) 3,1782,8373,0643,2533,468
Imports of Services (million USD) 12,86615,31617,09717,10218,936
Exports of Services (million USD) 16,91319,27621,94922,45224,835
Imports of Goods and Services (Annual % Change) 10.68.0-3.118.5-0.4
Exports of Goods and Services (Annual % Change) 7.26.0-0.413.74.7
Imports of Goods and Services (in % of GDP) 108.6120.7102.1115.1104.7
Exports of Goods and Services (in % of GDP) 124.5136.2118.6128.6122.8
Trade Balance (million USD) -1,444-1,252-2,357-3,328-2,647
Trade Balance (Including Service) (million USD) 3,7154,0003,8102,1604,009
Foreign Trade (in % of GDP) 233.1256.9220.6243.7227.5

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2023
Germany 26.9%
Japan 6.0%
Italy 5.4%
Hong Kong SAR, China 4.5%
Singapore 4.5%
See More Countries 52.8%
Main Suppliers
(% of Imports)
2023
Italy 22.9%
Germany 9.0%
France 8.6%
Spain 6.3%
Netherlands 5.3%
See More Countries 47.9%

Source: Comtrade, Latest Available Data

 
 

Main Products

3.5 bn USD of products exported in 2023
Electronic integrated circuits; parts thereofElectronic integrated circuits; parts thereof 27.8%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 11.6%
Unused postage, revenue or similar stamps of...Unused postage, revenue or similar stamps of current or new issue in the country in which they have, or will have, a recognised face value; stamp-impressed paper; banknotes; cheque forms; stock, share or bond certificates and similar documents of title 8.7%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 5.3%
Fish fillets and other fish meat, whether or not...Fish fillets and other fish meat, whether or not minced, fresh, chilled or frozen 4.2%
See More Products 42.4%
8.4 bn USD of products imported in 2023
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 12.4%
Yachts and other vessels for pleasure or sports;...Yachts and other vessels for pleasure or sports; rowing boats and canoes 8.7%
Electronic integrated circuits; parts thereofElectronic integrated circuits; parts thereof 8.1%
Powered aircraft "e.g. helicopters and aeroplanes...Powered aircraft "e.g. helicopters and aeroplanes"; spacecraft, incl. satellites, and suborbital and spacecraft launch vehicles 5.9%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 4.4%
See More Products 60.4%

Source: Comtrade, Latest Available Data

 
 

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Main Services

Source: United Nations Statistics Division, Latest Available Data

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Sources of General Economic Information

Ministries
Ministry of Finance
The Ministry for Education and Employment
Official list of ministries
Statistical Office
National Statistics Office
Central Bank
Central Bank of Malta
Stock Exchange
Malta Stock Exchange
Search Engines
Search Malta
Google Malta
About Gozo
Economic Portals
Malta Business Bureau

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Political Outline

Current Political Leaders
President: Myriam Spiteri DEBONO (since 4 April 2024)
Prime Minister: Robert ABELA (since 13 January 2020)
Next Election Dates
Presidential: April 2029
House of Representatives: March 2027
Main Political Parties
Since World War II, the political culture in Malta has been chiefly dominated by a two-party system. These two political parties are:

- Malta Labour Party (MLP): centre-left, social democratic party
- Nationalist Party (PN): centre-right, Christian democratic party

Other parties that took part in the latest elections include the AD+PD, a centrist political party, formed by the merger of the two most prominent third parties, the green Democratic Alternative (AD) and the social liberal Democratic Party (PD); the Eurofederalist and progressive pan-European Volt Malta; the far-right, Christian political party ABBA; and the right-wing populist, conservative People's Party.
Type of State
Republic based on parliamentary democracy.
Executive Power
The President of Malta is the chief of state and is elected by the Parliament for a five-year term. The Prime Minister is the head of government and holds executive powers, which include implementing laws and managing the day-to-day affairs of the country. The Prime Minister is appointed by the President, based on the leader of the majority party or coalition following parliamentary elections, which occur every five years. The Cabinet is appointed by the President on the advice of the Prime Minister.
Legislative Power
The legislature of Malta is unicameral, consisting of the House of Representatives, which has a minimum of 65 seats (79 for the 2022-2027 legislature). Its members are elected by popular vote based on proportional representation to serve five-year terms. If a political party wins an absolute majority of votes but does not secure a majority of seats, additional seats are allocated to that party to ensure a parliamentary majority. The President can dissolve Parliament on the advice of the Prime Minister, or alternatively, Parliament can dismiss the government by passing a no-confidence motion.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
81/180
 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
2/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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Latest Update: May 2025