403000
Maltese (official) 90.1%, English (official) 6%, multilingual 3%, other 0.9% (2005 est.)
VALLETTA (capital) 197,000 (2014)
- Conventional long form
- Republic of Malta
- Conventional short form
- Malta
- Local long form
- Repubblika ta' Malta
- Local short form
- Malta
parliamentary republic
- Name
- Valletta
- Geographic coordinates
- 35 53 N, 14 30 E
- Time difference
- UTC+1 (6 hours ahead of Washington, DC, during Standard Time)
- Daylight saving time
- +1hr, begins last Sunday in March; ends last Sunday in October
accepts compulsory ICJ jurisdiction with reservations; accepts ICCt jurisdiction
Malta’s free market economy – the smallest economy in the euro-zone – relies heavily on trade in both goods and services, principally with Europe. Malta produces less than a quarter of its food needs, has limited fresh water supplies, and has few domestic energy sources. Malta's economy is dependent on foreign trade, manufacturing, and tourism. Malta joined the EU in 2004 and adopted the euro on 1 January 2008.
- Inflation
- 0.577%
- Total tax rate (% of commercial profits)
- 43.8%
- Real Interest Rate
- 3.422%
- Manufacturing, value added (% of GDP)
- 8.604%
- Current Account Balance
- US$ 864,443,114
- Labor Force, Total
- 195,878
- Employment in Agriculture
- 1.62%
- Employment in Industry
- 19.80%
- Employment in Services
- 78.58%
- Unemployment Rate
- 5.32%
- Imports of goods and services
- US$ 14,179,336,224
- Exports of goods and services
- US$ 15,485,042,113
- Total Merchandise Trade
- 84.07%
- FDI, net inflows
- US$ 2,451,065,362
- Commercial Service Exports
- US$ 12,724,180,681
potatoes, cauliflower, grapes, wheat, barley, tomatoes, citrus, cut flowers, green peppers; pork, milk, poultry, eggs
tourism, electronics, ship building and repair, construction, food and beverages, pharmaceuticals, footwear, clothing, tobacco, aviation services, financial services, information technology services
- Commodities
- machinery and mechanical appliances; mineral fuels, oils and petroleum products; pharmaceutical products; books and newspapers; aircraft/spacecraft and parts; toys, games, and sports equipment
- Partners
- Egypt 13.7%, Germany 8.5%, Libya 5.7%, France 5.6%, Hong Kong 5.6%, Singapore 5.1%, US 4.5%, Italy 4.4% (2015)
- Commodities
- mineral fuels, oils and products; electrical machinery; aircraft/spacecraft and parts thereof; machinery and mechanical appliances; plastic and other semi-manufactured goods; vehicles and parts
- Partners
- Italy 19.2%, Canada 9%, Germany 5.7%, UK 5.3%, US 4.5%, France 4% (2015)
- Country Risk Rating
- A2
- The political and economic situation is good. A basically stable and efficient business environment nonetheless leaves room for improvement. Corporate default probability is low on average.
- Business Climate Rating
- A2
- The business environment is good. When available, corporate financial information is reliable. Debt collection is reasonably efficient. Institutions generally perform efficiently. Intercompany transactions usually run smoothly in the relatively stable environment rated A2.
- Crossroads between eastern and western Mediterranean regions
- Eurozone membership
- Considerable investment in transport, energy, education and health
- Tourist and port activities
- High added value industries (electronics)
- Productive, English-speaking and growing labor force (immigration, rising female employment rate)
- Public debt held by residents
- Small size and insularity
- Growing but aging population
- Structural deficit in trade in goods (no natural resources)
- Inadequate higher education provision
- Road infrastructure still inadequate
- Expensive energy for businesses
As in 2016, growth will be sustained by domestic demand. Private consumption will benefit from a lively job market (unemployment at 4.7% in September 2016), as well as from higher wages triggered by the scarcity of labor. Furthermore, household income is expected to benefit from the indexing of wages to inflation (Cost of Living Allowance or COLA), the raising of the tax threshold for pensioners aged over 62 to EUR 13,000, a doubling in housing benefit for those on low incomes, higher work-in and disability benefits. Public investment will be sustained by on-going work on the roads, the construction of marinas, a solar farm and schools, the start of a social housing construction program and modernization of the Has Saptan fuel depot. Industrial investment will remain solid, insofar as exports of electronic, electrical and optical components, the archipelago's main manufacturing output, as well as exports of generic medicines and seafood, gain from the euro's weakness. Tourism (23% of GDP and 9% of employment) will still profit from Maltese competitiveness (quality-price ratio, security and healthcare situation) compared with other Mediterranean destinations for European, especially British and Italian, tourists (30 and 11% of spending respectively). The likely reduction in the flow of British tourists associated with the depreciation of sterling will be offset by greater visitor diversification. Income from electronic gaming (e.g. poker) over the Internet and digital television is increasing. Finally, port activity is benefitting fully from the country's ideal location at the crossroads of Mediterranean routes and particularly its position half-way between the Suez Canal and Gibraltar. Nonetheless, the contribution of trade to growth is expected to remain slightly negative, because of the import content of investment.
Fiscal consolidation was not an essential priority for Labor, back in power under the leadership of Prime Minister Joseph Muscat since 2013 after fifteen years of rule by the center-right Nationalist party. All the same, a budget responsibility law was passed in 2014. Despite the adoption of new social spending, the setting up of a development bank and an export credit agency, the loss in momentum on sales of Maltese citizenship for EUR 650,000 euros to any foreigner with over one year of residency, not to mention potential new aid for the publicly-owned Air Malta, the deficit is expected to remain low in 2017. This is because revenues will benefit from robust consumption, higher taxes on tobacco, construction materials and other products, while the absorption of European funds will increase and debt interest payments will fall. The primary surplus (i.e. excluding debt interest) and growth will contribute to a substantial reduction in the public debt (to which should be added State guarantees on the debts of public sector companies like ENEMALTA, accounting for 14% of GDP), but which is, however, held by residents, specifically the local banks.
Despite a huge deficit in the trade in goods (amounting to 22% of GDP in 2016), due to the lack of energy resources, poor diversification of manufacturing output and the high import content of consumer goods, the country runs a current account surplus. This is explained by the positive balance on services linked to tourism, remote electronic gaming, as well as the duty-free port at Marsaxlokk. Its transshipment, logistics and warehousing activities for containers and oil products are awarded as a concession by the state-owned company Malta Freeport Corp. Ltd to private businesses. This port is used for transshipping cargoes from high-tonnage vessels to smaller vessels suited for smaller capacity Mediterranean ports and vice versa. The port of Valetta retains the other port operations.
The financial sector manages assets equal to 534% of GDP (as at end 2015) and contributes about 15% of public revenues. However, the largest share (284% of GDP, trending downward) is held by subsidiaries of foreign, namely British, German and Turkish, groups, looking for advantageous tax arrangements. They operate using non-resident resources, invest only abroad and employ few local staff. The true local banks, essentially Bank of Valletta, HSBC and Mediterranean Bank manage assets representing 250% of GDP. They hold a third of the sovereign debt and are very involved in household mortgage finance. The lack of competition ensures they have a good level of profitability, even if non-performing loans make up about 9% of their portfolios, held mainly in real estate and construction portfolios.