Figures by the NSO and Eurostat show that Malta’s GDP and labour market were hot during the first quarter of this year, following on the previous economic success of the last quarter of 2025. Provisional government figures also show that the government’s public finances are also improving.
Tourist numbers are hitting new records. The Maltese economy is strongly active thanks to tourism and government expenditure and it is showing signs of bullish momentum, overriding previous signs that the economy was cooling off.
However, Malta is also going through relatively high inflation when compared to the Euro and EU averages. Inflation in Malta is mostly being reflected in food, and obviously in housing. The government will be issuing further subsidies to address these issues, potentially making inflation eve hotter.
Although the economy seems to be hot, structural social and economic issues remain and the government plans only to mitigate their effects via subsidies: the government will not address these issues systematically. The main issue is the ever growing difference between income and property prices. Property prices don’t show any signs of cooling down and this gap may very likely keep growing in fundamental terms, despite the mitigating effect of subsidies.
There is also the risk that this growth is very unsustainable if consumption is the only thing that it is driving it. If the global economy goes through another crisis, the consumption of the local economy will dry up and the government’s public finances will go into significant disarray. The government clearly can not afford another global crisis and the Minister for Finance is betting that the global economy is going to do well in the next few months and years.
The economy is definitely hot and government finances are improving. However, the risks to this fiscal and economic balance are increasingly becoming larger while economic over-heating also risks exacerbating ongoing social issues.
There is no discussion ongoing about macro-economics and general economic policy. The discussion about the Maltese economy has been reduced to simply a game of GDP growth: irrespective how this comes about. The government and also the Opposition refuse to look deeper into what’s going on and are addressing systematic problems with a series of patchworks while finding solace in strong GDP numbers.
Malta’s economy does indeed look hot, but the economic dysfunction that is causing social problems will persist because the fundamentals of these economic issues are not being addressed.
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Historian and Publisher
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