An analysis which compares the changes in the Maltese economy (Malta and Gozo) over the past decade since the financial crisis.
This article examines the current state of the economy Malta and Gozo as compared to the situation nearly ten years ago during the start of one of the worst economic downturns to ever effect the global economy. One can see how various sectors of the Maltese economy not only survived the economic downturn, but in the years which followed flourished and grew, driving Malta into economic boom. Comparisons with other major European economies will also show how Malta’s economy has generally succeeded in consistently outperforming the European market over the past decade.
Taking inspiration from recent comments made by the International Monetary Fund, one can see a comparison of the real economic growth registered by Malta and other major European nations. Malta’s economy has seen cumulative economic growth in the region of 35% over the past decade, supporting the IMF’s statement of it being “one of the fastest-growing economies in Europe”. A more detailed breakdown of the country’s various economic sectors gives a clear insight into which industries have been the main driving forces behind this expansion.
While tales of austerity and record level of youth unemployment have been heard from several EU Member States, the situation in Malta couldn’t be more different. The past decade has seen a decline in both unemployment as well as inactivity, and as the Maltese economy has grown, so too has the number of jobs created. Over the past decade the growth in the Maltese economy has led to the creation of well over 37,000 new jobs, a figure which is all the more impressive considering that the country has a total population of around 430,000.
The Maltese banking sector has grown over the past decade. Cautious practices and compliance with evolving regulatory requirements have seen changes in the structure of the industry’s loan portfolios. The past decade has also seen local banks increase the ratio of assets held against the loans they have issued. The Maltese economy has proven to be a stable jurisdiction more than capable of supporting a healthy banking environment.
Over the past decade the Maltese government has consistently increased its level of spending while also pulling in increasing levels of revenue. As the gap between the two has narrowed in recent years it is clear that the past decade’s economic growth has resulted in stronger public finances without the need to resort to broad austerity programmes as seen in other European nations. Moving forward increased economic growth will serve to offset the additional pressures put on the public purse by an ageing population.
Economic growth in Malta has translated in increased levels of disposable income for households. Average household income in 2015 was over 41% higher than in 2007. This reflects the economy’s increased level of output and strong performance over the past few years.
Increased income would generally contribute to an improved quality of life. Strong economic performance has also enable government to carry out additional investment in both healthcare and education, with over €500 million worth of capital expenditure invested into these sectors over the past decade. In part as a result of this investment one can note that life expectancy in Malta has increased to an average of 82 years, and as of 2016, almost 50% of the population had completed upper secondary or tertiary education.
This has also been published as an article on Finance Malta.
© 2021 KPMG, a Maltese civil partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.