Economy of Malta

Economy of Malta

Currency Euro (EUR)[1]
Calendar year
Trade organisations
 EU, WTO, Commonwealth and the OSCE
Statistics
GDP Increase$11.22 billion (PPP, 2013 est.)
GDP growth
 Increase2.4% (Real, 2013 est.)
GDP per capita
 Increase$29,200 (PPP, 2012 est.)
GDP by sector
 Agriculture: 1.4%; Industry: 25.3%; Services: 73.3% (2013 est.)
Decrease1.0% (CPI, 2013 est.)
Population below poverty line
 Decrease15.1% (2012)
27.1 (2012)
Labour force
 Increase190,400 (2013 est.)
Labour force by occupation
 DecreasePublic Administration: 26.6%
IncreaseTrade, Transport, Accommodation & Food: 28.6%
Decrease Manufacturing & Industry: 15.7%
IncreaseProfessional, Scientific & Technical: 7.7%
DecreaseConstruction: 5.6%
IncreaseFinancial & Insurance: 4.4%
Agriculture & Fishing: 1.6%
DecreaseInformation & Communication: 3.5%
IncreaseOther Services: 5.6% (2014 est.)[2]
Unemployment Decrease5.9% (02.2015)[3]
Average gross salary
 €1,355.58 monthly (2014)[4]
€16,267 yearly (2014)[4]
Main industries
 Tourism, electronics, ship building and repair, construction, food and beverages, pharmaceuticals, footwear, clothing, tobacco, aviation services, financial services, information technology services
External
Exports Decrease$4.938 billion (2014 est.)
Export goods
 Machinery and mechanical appliances, mineral fuels, oils and products, pharmaceutical products, printed books and newspapers, aircraft and parts, toys, games and sports equipment
Main export partners
  Germany 18.1%
 Libya 10.2%
 France 8.6%
 United Kingdom 7.3%
 Italy 5.9%
 Turkey 5.9%
 Greece 5.1%
 China 4.3%
(2014 est.)[5]
Imports Increase$8.384 billion (2014 est.)
Import goods
 Mineral fuels, oils and products, electrical machinery, aircraft and parts, machinery and mechanical appliances, plastic and other semi-manufactured goods, vehicles and parts
Main import partners
  Italy 19.3%
 United Kingdom 10.3%
 Germany 8.2%
 France 7.1%
 China 5.8%
 Greece 5.0%
 Spain 4.8%
 Netherlands 3.7% (2014 est.)[6]
FDI stock
 Decrease$15.17 billion (31 June 2013)
Increase$5.241 billion (2013 est.)[7]
Public finances
Increase69.8% of GDP (2013 est.)[7]
Revenues $4.843 billion (2013 est.)
Expenses $4.322 billion (2013 est.)
Foreign reserves
 Decrease$377 million (31 December 2013)
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

Malta is a highly industrialised, service based economy. It is classified as an advanced economy by the International Monetary Fund[11] and is considered a high income country by the World Bank[12] and an innovation-driven economy by the World Economic Forum.[13] It is a member of the European Union and of the eurozone, having formally adopted the euro on 1 January 2008.[14]

The strengths of the economy of Malta are its strategic location, being situated in the middle of the Mediterranean Sea at a crossroads between Europe, North Africa and the Middle East, its fully developed open market economy, multilingual population (88% of Maltese people speak English),[15] productive labour force, low corporate tax[16] and well developed finance and ICT clusters. The economy is dependent on foreign trade, manufacturing (especially electronics), tourism and financial services. In 2014, over 1.7 million tourists visited the island.[17]

Malta's GDP per capita, adjusted by purchasing power parity, stands at $29,200[18] and ranks in 15th place in the list of EU countries in terms of purchasing power standard.[19] In the 2013 calendar year, Malta recorded a budget deficit of 2.7%,[20] which is within the limits for eurozone countries imposed by the Maastricht criteria, and Government gross debt of 69.8%.[21] At 5.9%, Malta has the sixth lowest unemployment rate in the EU.[22]

Malta is the 15th most democratic country in the world according to the Economist Intelligence Unit's Democracy Index.

History

During the Napoleonic Wars (1800–1815), Malta's economy prospered and became the focal point of a major trading system. In 1808, two-thirds of the cargo consigned from Malta went to Levant and Egypt. Later, one-half of the cargo was usually destined for Trieste. Cargo consisted of largely British and colonial-manufactured goods. Malta's economy became prosperous from this trade and many artisans, such as weavers, found new jobs in the port industry.

In 1820, during the Battle of Navarino, which took place in Greece, the British fleet was based in Malta. In 1839, the Peninsular and Oriental Steam Navigation Company and East India Companies used Malta as a calling port on their Egypt and Levant runs.

In 1869, the opening of the Suez Canal benefited Malta's economy greatly as there was a massive increase in the shipping which entered in the port. The economy had entered a special phase. The Mediterranean Sea became the "world highway of trade" and a number of ships called at Malta for coal and various supplies on their way to the Indian Ocean and the Far East.

From 1871 to 1881, about 8,000 workers found jobs in the Malta docks and a number of banks opened in Malta. By 1882, Malta reached the height of its prosperity.

However, the boom did not last long. By the end of the 19th century, the economy began declining and by the 1940s, Malta's economy was in serious crisis. This was primarily due to the invention of large ships which had become oil-fired and therefore had no need to stop in the Grand Harbour of Malta to refuel. The British Government had to extend the dockyard.

At the end of World War II, Malta's strategic importance had reached a low point. Modern air warfare technology and the invention of the atomic bomb had changed the importance of the military base. The British lost control of the Suez Canal and withdrew from the naval dockyard, transforming it for commercial shipbuilding and ship repair purposes.

Modern economy

The Maltese economy is dependent on foreign trade, manufacturing (especially electronics and pharmaceuticals), and tourism. Economic recovery of the European economy has lifted exports, tourism, and overall growth. Malta adopted the euro on 1 January 2008.

Tourist arrivals and foreign exchange earnings derived from tourism have steadily increased since the 1987 watershed, in which there was growth from the previous year of, respectively, 30% and 63% (increase in terms of U.S. dollars). Following the September 11 attacks, the tourist industry suffered a temporary setback.

With the help of a favourable international economic climate, the availability of domestic resources, and industrial policies that support foreign export-oriented investment, the economy has been able to sustain a period of rapid growth. During the 1990s, Malta's economic growth has generally continued this brisk pace. Both domestic demand (mainly consumption) boosted by large increases in government spending, and exports of goods and services contributed to this favorable performance.

Buoyed by continued rapid growth, the economy has maintained a relatively low rate of unemployment. Labour market pressures have increased as skilled labour shortages have become more widespread, despite illegal immigration, and real earnings growth has accelerated.

Growing public and private sector demand for credit has led—in the context of interest rate controls - to credit rationing to the private sector and the introduction of noninterest charges by banks. Despite these pressures, consumer price inflation has remained low (2.2% according to the Central Bank of Malta 2nd Quarterly Report in 2007), reflecting the impact of a fixed exchange rate policy (100% hard peg to the euro, in preparation for currency changeover) and lingering price controls.

The Maltese Government has pursued a policy of increased economic freedom and privatisation, taking some steps to shift from reliance on government intervention to allowing a greater role for free market mechanisms. While change has been substantial, the economy remains regulated.

There is a strong manufacturing base for high value-added products like electronics and pharmaceuticals, and the manufacturing sector has more than 250 foreign-owned, export-oriented enterprises. Tourism generates around 15% of GDP. Film production in Malta is another growing industry (approx. 35 million euros between 1997 and 2011), despite stiff competition from other film locations in Eastern Europe and North Africa, with the Malta Film Commission providing support services to foreign film companies for the production of feature cinema (Gladiator, Troy, Munich, Count of Monte Cristo and World War Z, amongst others, were shot in Malta over the last few years), commercials and television series.[23]

Over the period 2001-2004 the mean GDP real growth was 0.4%[24] due to Malta losing pace in tourism and other industries. Unemployment was down to 4.4%, its lowest level in 3 years. Many formerly state-owned companies are being privatized - and the market liberalized.

Fiscal policy has been directed toward bringing down the budget deficit after public debt grew from a negative figure in 1988 to 56% in 1999 and 69.1% in 2009.[25] By 2007, the deficit-to-GDP ratio was comfortably below 3% as required for eurozone membership, but due to pre-election spending has gone up to 4.4% in 2008 and 3.8% in 2009.[25]

Energy

Main article: Energy in Malta

Despite a great potential for solar and wind power,[26] Malta produces almost all its electricity from oil, importing 100% of it.[27]

Energy and the cost of energy, which is oft-quoted as the highest in Europe, was a key issue in the 2013 election.[28]

Industry

Average annual employment and average annual earnings in manufacturing industry (2007)[29]
Sector Average annual
employment		 Average annual
earnings per capita
in euros
Food and Beverages; Tobacco 2,873 13,441
Textiles and textile products 422 15,512
Wearing apparel and clothes 733 11,698
Leather and leather products 185 9,308
Wood and wood products 78 12,000
Paper and paper products 265 15,698
Publishing and printing 1,669 17,615
Chemicals and chemical products 1,038 19,052
Rubber and plastic products 1,578 15,254
Other nonmetallic mineral products 766 11,928
Fabricated metal products 596 14,451
Machinery and equipment n.e.c. 446 13,518
Electrical machinery and apparatus 1,409 16,515
Radio, TV and Communication equipment 3,168 18,673
Medical, precision and optical instruments 877 15,582
Motor vehicles, trailers and semitrailers 50 10,220
Other transport equipment 258 20,938
Furniture and Manufacturing n.e.c. 1,597 15,753
Total 18,008 15,812

Statistics

Electricity - production: 1,620 GWh (1998)

Electricity - production by source:
fossil fuel: 98.6%
hydro: 0%
nuclear: 0%
Renewable sources: 1.4%
other: 0% (1998)

Electricity - consumption: 1,507 GWh (1998)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 0 kWh (1998)

Agriculture - products: potatoes, cauliflower, grapes, wheat, barley, tomatoes, citrus, cut flowers, green peppers; pork, milk, poultry, eggs

Currency: 1 euro = 100 cents since 1 January 2008
previously 1 Maltese lira = 100 cents;

Exchange rates: Maltese liri (LM) per US$1 – 0.4086 (January 2000), 0.3994 (1999), 0.3885 (1998), 0.3857 (1997), 0.3604 (1996), 0.3529 (1995) Irrevocably fixed conversion rate to the euro: Maltese liri (LM) per EUR1 - 0.4293 (2007)

Poverty

Poverty and social exclusion are problems in Malta but the situation is not worse than in the rest of the European Union.[30]

See also

References

  1. ↑ Before 1 January 2008: Maltese lira
  2. ↑ "Labour Force Survey: Q4, 2014". National Statistics Office, Malta. Retrieved 8 April 2015.
  3. ↑ "Seasonally adjusted unemployment". Eurostat. Retrieved 7 April 2015.
  4. 1 2 "Labour Force Survey". National Statistics Office, Malta. Retrieved 7 April 2015.
  5. ↑ "Export Partners of Malta". CIA World Factbook. 2013. Retrieved 8 April 2015.
  6. ↑ "Import Partners of Malta". CIA World Factbook. 2013. Retrieved 8 April 2015.
  7. 1 2 "General Government Gross Debt". Eurostat. Retrieved 2015-04-08.
  8. ↑ Dalli, Miriam (10 January 2015). "Standard & Poor's reaffirms BBB+ rating for Malta, stable outlook". MaltaToday. Retrieved 8 April 2015.
  9. ↑ "Moody's affirms A3 rating for Malta with a positive outlook, concerns about national debt". The Malta Independent. 28 October 2014. Retrieved 8 April 2015.
  10. ↑ "Fitch affirms Malta at 'A'; outlook stable". The Times of Malta. 27 February 2015. Retrieved 8 April 2015.
  11. ↑ "World Economic Outlook Database: Changes to the Database". International Monetary Fund. April 2008. Retrieved 8 April 2015.
  12. ↑ "World Bank Country Data: Malta". The World Bank. 2015. Retrieved 8 April 2015.
  13. ↑ "The Global Competitiveness Report 2014-2015". World Economic Forum. 2014. Retrieved 8 April 2015.
  14. ↑ "Cyprus and Malta adopt the euro". Wikinews. 1 January 2008. Retrieved 8 April 2015.
  15. ↑ "Top Reasons to Invest in Malta". Malta Enterprise. 2012. Retrieved 8 April 2015.
  16. ↑ "EY's 2014 Malta Attractiveness Survey". Ernst & Young. 8 October 2014. Retrieved 8 April 2015.
  17. ↑ "Inbound Tourism: December 2014". National Statistics Office, Malta. 30 January 2015. Retrieved 8 April 2015.
  18. ↑ "The World Factbook: Malta". CIA World Factbook. 20 June 2014. Retrieved 8 April 2015.
  19. ↑ "Malta's GDP per capita in 15th place". Times of Malta. 20 June 2013. Retrieved 8 April 2015.
  20. ↑ "General Government Deficit (-) and Surplus (+): Annual Data". Eurostat. 11 December 2014. Retrieved 8 April 2015.
  21. ↑ "General Government Gross Debt: Annual Data". Eurostat. 11 December 2014. Retrieved 8 April 2015.
  22. ↑ "Unemployment Statistics". Eurostat. February 2015. Retrieved 8 April 2015.
  23. ↑ "Malta : 4.2 Specific policy issues and recent debates : 4.2.6 Media pluralism and content diversity". Retrieved 3 March 2015.
  24. ↑ "Malta". Global Finance Magazine. Retrieved 3 March 2015.
  25. 1 2 "2009 deficit down to €218.2 million". Times of Malta. Retrieved 3 March 2015.
  26. ↑ “MALTA – Renewable Energy Fact Sheet.” Europa. January 2007. <http://ec.europa.eu/energy/energy_policy/doc/factsheets/renewables/renewables_mt_en.pdf>
  27. ↑ “MALTA – Energy Mix Fact Sheet.” Europa. January 2007. <http://ec.europa.eu/energy/energy_policy/doc/factsheets/mix/mix_mt_en.pdf>
  28. ↑ "The great energy debate". Times of Malta. Retrieved 3 March 2015.
  29. ↑ Malta in Figures - National Statistics Office, Malta, 2008 ISBN 978-99909-73-64-8
  30. ↑ "Maltese living in poverty". Times of Malta. Retrieved 3 March 2015.
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