According to the latest NSO statistics, GDP growth for the first quarter of this year was recorded at 3.9%, with local demand consisting of up to 3.6% of the share and foreign trade at 0.3%. The figure is higher than the same quarter of last year, reaching a nominal value of €6.18 billion, and an increase of €402.2 million, or 7.0%, over the first quarter of 2025.
However, government expenditure is also increasing and fueling this expenditure. The publication of the government’s finances statistics have been withheld today citing “reflection day”.
Final consumption expenditure increased by 5.0% in volume terms. Household consumption rose by 3.8%, but the most politically relevant figure remains government consumption, which increased by 8.5%. Government final consumption alone contributed nearly the same contribution as private consumption according to the figures.
Gross fixed capital formation increased by 3.6% in real terms, while exports and imports of goods and services increased by 4.9% and 5.6% respectively. Imports are increasing faster offsetting exports reduction in GDP figures.
Gross Value Added increased by 3.7% in volume terms. Services remained the main driver of economic activity, while agriculture and fishing continued shrinking. The strongest growth within services was recorded in financial and insurance activities, which increased by 9.0%, followed by information and communication at 5.3%, and professional, scientific and technical activities at 4.7%.
The income side of the accounts also shows where the money is going. The €402.2 million increase in nominal GDP was mainly composed of a €232.5 million increase in compensation of employees, a €98.2 million increase in gross operating surplus and mixed income, and a €71.4 million increase in taxes on production and imports less subsidies. This means that wages are still rising strongly, especially in the services sector, but this also reflects the continued expansion of employment and labour demand rather than a decisive productivity breakthrough.
Malta’s economy keeps growing, but it is still growing due to an expanding labour market, more consumption, more imports and ultimately, more government spending.
Newsroom
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