Economic Overview
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
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, thus it was severely affected by the outbreak of the COVID-19 pandemic and the restrictions that followed. After rebounding strongly in 2021, the country’s economy showed strong growth in both private and public consumption, as well as in the tourism sector, reaching an estimated overall growth rate of 6.6% in 2022. Due to the weaker performance expected by Malta’s trading partners, GDP growth is set to decelerate to 3.3% in 2023 before slightly increasing to 3.6% the following year (IMF).
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 (including raises in the weekly cost of living adjustment and pensions and child allowances, one-off payments to the most vulnerable, and tax refund cheques). Fitch Ratings estimates energy and food subsidies to amount to EUR 396 million by the end-2022 (2.4% of GDP) and EUR 605 million (3.5% of GDP) in 2023, partially offset by stronger-than-expected revenue growth, contributing to budget deficits of 6% and 4.9% of GDP, respectively (IMF). After decreasing from above 70% to around 50% in five years, the debt-to-GDP ratio increased to 57% in 2022 and is expected to follow an upward trend over the forecast horizon (58.2% and 58.4% in 2023 and 2024, respectively). Inflation reached 5.9% in 2022, despite energy prices being kept at the 2020 level by government intervention, and is set to remain elevated this year (at 4.6%) due to continuing pressures in food, transport, and imported goods prices.
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. In 2022, unemployment stood at 3.2% (from 3.5% one year earlier), with projections for a marginal increase over the forecast horizon (to around 3.4% by 2024). Increasingly, EU and non-EU European migrants are relocating to Malta for employment, though wages have remained low compared to other European countries. Nevertheless, 20.3% of the Maltese population was at risk of poverty and social exclusion in 2021, according to the latest data by Eurostat. Overall, the country’s GDP per capita (PPP) was estimated at USD 56,338 in 2022 by the IMF, 4.4% above the EU average.
| Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
| GDP (billions USD) | 15.03 | 17.76 | 17.78 | 19.41 | 20.51 |
| GDP (Constant Prices, Annual % Change) | -8.6 | 11.8 | 6.9 | 3.5 | 3.5 |
| GDP per Capita (USD) | 29,217 | 34,403 | 34,127 | 36,990 | 38,905 |
| General Government Balance (in % of GDP) | -5.7 | -6.5 | -5.6 | -5.0 | -3.8 |
| General Government Gross Debt (in % of GDP) | 52.9 | 55.1 | 55.8 | 56.9 | 57.1 |
| Inflation Rate (%) | 0.8 | 0.7 | 6.1 | 5.8 | 3.4 |
| Unemployment Rate (% of the Labour Force) | 4.4 | 3.4 | 2.9 | 3.1 | 3.2 |
| Current Account (billions USD) | 0.69 | 0.76 | 0.12 | 0.34 | 0.35 |
| Current Account (in % of GDP) | 4.6 | 4.3 | 0.7 | 1.8 | 1.7 |
Source: IMF – World Economic Outlook Database , October 2021
Country Risk
See the country risk analysis provided by La Coface.
