Is Malta’s Economy Safe?

The economy in Malta has been performing exceptionally well over the past years. This positive run is expected to extend in the coming years. Looking at it objectively, it does seem that the Government has found the right model to ensure growth for the foreseeable future. 

Recent forecasts indicate that Malta’s economy will continue to retain its position as the best performing within the EU for the next two years, even though it may experience some decreases in growth. Although things are indeed bright for Malta and it does seem that the country will continue to lead with example in terms of economic growth, this does not come without any warning signs.

The local Maltese economy is heavily dependent on the low taxation regime. What will happen if other countries revise their tax regimes and become more competitive? In parallel, we also have a constantly increasing cost of living which is reducing Malta’s competitiveness. The difficulty to find staff, higher salary demands, increased costs of rent and a housing shortage may impede further economic growth.

The constant economic growth also needs to be discussed in the context of the pressures being applied to the island. The country faces infrastructural challenges as many argue that Malta is not equipped to cater for many people, especially when considering that the population is expected to rise up to seven hundred thousand in the coming years. To accommodate all these people, more property development is required, and this may come at the expense of the environment. Not everyone would be thrilled to see Malta following a similar model to that of Dubai.

Some also argued that the remarkable increases in property prices do not reflect sustainability but a potential bubble which could be of detriment to the Maltese economy. It is also problematic for first time buyers who are seeking to establish themselves on the property ladder.

The tourism industry is also performing well with many renting out apartments for tourists, earning a healthy income. The increased amount of rental apartments available has negatively impacted hotels due to the higher and lesser cost competition. 

The expanded population is also being interlinked with larger traffic volumes and respiratory problems, which may also impact the economy negatively. The impact of these on the economy is not measured and is not tangibly communicated to the public.

These are clear indications that Malta for sure cannot rest on its laurels and must address these hidden dangers at once. Failing to do so may put future generations at risk.

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