Malta Economic Report
Hi all,
I've enclosed my firms economic report on Malta. This is a high level report which provides an interesting overview of Malta.
Malta Economic Report:
According to Central Bank of Malta Protected content is a classic example of a “small island economy” in terms of constraints and opportunities. A relatively small domestic market limits economies of scale in both the provision of goods and services and in the provision of infrastructure. There is a limited range of raw materials and in some cases (water) there is a real shortage. It is a very open economy with imports and exports representing a very high percentage of Gross Domestic Product (GDP) (over 120% in both cases). A Population size of 423,300.00 (The World Bank Group, Protected content . Economic performance can be negatively affected by economic policies and performance in neighboring countries and key trading partners and out migration of skilled and trained human resources is an ever present threat.
Nevertheless Malta enjoys some notable advantages and opportunities. Malta joined the European Union in Protected content the Eurozone in Protected content provides ready access to a very large market. Furthermore membership of the EU brings access to concessionary regional development resources for the poorer members and creates a unified framework for regulatory activity and oversight that would be impossible for Malta to develop from its own resources.
The country enjoys good transport and communication links, a stable and cohesive social structure and a benign and facilitative political system.
Since Independence, Government economic policy has become progressively more liberal and supportive of private business development, both domestic and foreign. The early emphasis on direct government intervention and administrative control has given way to a policy regime that allows for a predominant role for market mechanisms.
There are an array of tax incentives available for domestic and foreign investors, and the government has a developed an advisory extension service to assist small scale enterprises in their early gestation periods.Today the economy has a somewhat more diversified mix of economic activity. This is centered on services such as tourism, financial services and international banking, e-gaming, insurance and leasing and asset registries. Manufacturing has moved to the lighter end of the industry spectrum, with considerable development of pharmaceuticals, information technology, beverages, footwear and clothing. The GDP composition is currently distributed as follows: Agriculture 1.4%, Industry 25.3% and Services 73.3%.
Over the past decade Malta has developed a variety of niche activities catering to a European market taking advantage of the domestic skill base and the competitive pricing of this labor. This has occurred in light manufacturing, aviation repair and maintenance, software production, healthcare and leisure activities.
This diversification has created a remarkably robust economy. Throughout the period from the start of the financial crises in Protected content , Malta has maintained a steady growth rate and avoided much of the contagion of the financial difficulties within the Eurozone. Immediately following the international financial shocks of Protected content , the economy did contract in Protected content , however positive growth was restored in Protected content this has been maintained ever since. Unemployment remains one of the lowest in the Eurozone at 6.4%, and the current account balance has continually improved moving into surplus in Protected content . For the fourth consecutive year the tourism sector has witnessed strong growth with tourism numbers growing by 9.6% in Protected content increasing diversification across the country of origin of tourists. Given the strong linkages that tourism has to a range of ancillary services, this tourism performance has been a strong driver of overall growth.
Overall macroeconomic management has been sound. Public sector finances are managed relatively well with very little reliance on external financing by the government. Fiscal deficits have been in the range of about 3% of GDP over the past five years, and net public debt remains steady at about 65% of GDP. Standard and Poor’s long term credit rating for Malta is “A-“ reflecting the deepening concern about the monetary and financial problems within the Eurozone. There is need for further improvement and there are a number of public corporations that require considerable restructuring. In particular, the electricity sector is weak, and has one of the highest rate structures in Europe. This requires a massive investment in generation facilities and sourcing of energy and must be undertaken with international partners given the resources needed.
In sum, Malta has evolved into a diversified and resilient economy over the past ten years. This robust performance has seen the emergence of many new domestic firms and increasing foreign investor interest in the country. It seems a propitious time therefore for your move to Malta.