MALTA: An Introduction

Malta’s Economic Outlook for 2025: Overview

Macroeconomic performance and growth projections

Malta’s real gross domestic product growth is projected to moderate from approximately 6% in 2024 to 4% in 2025, according to Central Bank of Malta projections. This deceleration reflects a normalisation trajectory following the exceptionally robust growth rates experienced in recent years. Economic expansion is anticipated to ease further in subsequent years, reaching 3.3% by 2027. This moderation trajectory aligns with the country’s convergence towards potential output growth whilst preserving robust macroeconomic fundamentals.

Domestic demand is anticipated to serve as the primary catalyst for economic growth, driven predominantly by private consumption, which is projected to maintain vigorous expansion. The economy benefits substantially from the significant widening of income tax bands announced in Budget 2025, which will enhance household disposable income and underpin sustained private consumption growth.

Inflation trajectory and price stability

The Central Bank of Malta forecasts a decline in consumer price inflation, with the rate anticipated to decrease to 2.1% in 2025. By 2026, inflation is projected to align with the European Union’s target of 2%. Malta’s Harmonised Index of Consumer Prices rate increased to 2.1%, representing a decrease from 2.7% recorded in March 2024, reflecting the beneficial impact of government energy support measures.

Consumer expenditure and fiscal policy

The anticipated increase in disposable income is expected to contribute significantly to enhanced private consumption and a recovery in the savings ratio, driven by planned modifications to income tax bands announced in the national budget. These fiscal adjustments include raising the tax-free threshold and recalibrating tax brackets across various taxpayer categories, thereby strengthening the foundation for sustained consumer spending.

Demographic transformation and structural challenges

Malta’s demographic landscape is experiencing profound transformation, with population growth of 32% over the past decade, from 428,156 in 2014 to 563,443 in 2024, elevating population density to 1,789 persons per square kilometre, which is among the highest in the European Union. This demographic expansion has been driven primarily by an influx of expatriate workers rather than natural population increase.

Malta’s economy demonstrates remarkable resilience, with moderate yet sustainable growth trajectories anticipated for 2025. The diversified economic foundation, robust labour market dynamics and supportive fiscal measures provide a solid platform for continued prosperity. Principal challenges include managing demographic pressures, maintaining competitiveness in traditional economic sectors and adapting to evolving global trade conditions. The economic outlook remains decidedly positive, with growth expected to stabilise around potential output levels whilst maintaining price stability and employment strength.

Sectoral overview

From a sectoral perspective, the financial services sector emerges as a principal driver of economic growth, alongside real estate, construction and the public sector. However, a notable trend has emerged whereby higher value-added sectors – including professional services and information and communications technology – have experienced comparatively slower growth rates, presenting both challenges and opportunities for economic diversification.

Financial services industry

Malta’s financial services industry outlook for 2025 is characterised by regulatory sophistication, technological innovation and strategic positioning within the European Union framework. The implementation of outcomes-based supervision, comprehensive crypto-asset regulation and enhanced digital resilience requirements positions Malta as a mature and forward-thinking financial centre. The emphasis on sustainable finance, cross-border co-operation and financial technology innovation suggests continued growth potential, although attention to productivity trends across sectors remains crucial for long-term competitiveness.

The regulatory landscape demonstrates Malta’s unwavering commitment to maintaining exemplary standards whilst fostering innovation, establishing the jurisdiction as an attractive destination for both traditional financial services and emerging financial technology enterprises seeking a well-regulated European operational base.

Fintech and innovation sectors

Malta’s fintech sector benefits from a competitive taxation regime, robust IT infrastructure, strong regulatory framework and an ecosystem of service providers that has grown exponentially over the past 15 years. The MFSA’s regulatory sandbox, launched in 2020 and updated in 2022, continues to provide start-ups and established firms with flexibility to experiment under regulatory oversight.

Investment in Malta’s financial technology sector concentrates primarily on emerging areas such as payments, cryptocurrencies and decentralised finance, positioning the jurisdiction at the forefront of financial innovation.

The Markets in Crypto-Assets Regulation has been comprehensively implemented, with the Markets in Crypto-Assets Act, 2024 published to supplement the directly applicable European Union provisions. Malta continues to be recognised as a front-runner in crypto-friendly regulation, having been among the first European Union jurisdictions to establish a comprehensive regulatory regime for virtual financial assets.

Malta is proactively adapting to emerging technological developments, with the European Union’s Artificial Intelligence Act now applicable and the Digital Operational Resilience Act having entered into effect in January 2025. These regulatory frameworks will significantly impact financial technology businesses, particularly those utilising artificial intelligence systems for credit scoring and other high-risk applications.

Maritime and aviation industries

Malta’s maritime and aviation industries entered 2025 with robust regulatory frameworks, strategic government support and strong international positioning. The comprehensive legislative reforms, particularly the Merchant Shipping Amendment Act and the restructuring of Transport Malta, demonstrate the government’s commitment to maintaining Malta’s competitive advantage in these crucial economic sectors.

Malta’s maritime industry, excluding economic multiplier effects, constitutes approximately 15% of Maltese gross domestic product, with an output growth rate of approximately 13%. The sector continues to demonstrate exceptional resilience and growth potential, positioning itself strategically for further expansion throughout 2025.

Malta’s aviation sector has established itself as a significant economic pillar, with the aeronautical industry representing 2.5% of national gross domestic product. The government has recognised aviation’s strategic importance and developed comprehensive visions to facilitate the sector’s achievement of ambitious growth objectives.

The emphasis on environmental compliance, digital resilience and safety standards reflects Malta’s alignment with international best practices whilst supporting sustainable industry growth. As these regulatory frameworks take effect, both sectors are optimally positioned to capitalise on Malta’s strategic advantages whilst meeting evolving international standards and market demands. Both industries are positioned for sustained growth, albeit within evolving regulatory landscapes. The potential of the maritime sector is yet to be fully realised, with logistics presenting exceptional opportunities for the Maltese islands due to their strategically centralised location in the Mediterranean basin.

Conclusion

In conclusion, Malta’s economic outlook is one of confidence, equipped with the institutional frameworks, economic diversification and strategic vision necessary to sustain its position as a dynamic and resilient economy within the European Union. The challenges ahead are manageable within the context of the nation’s proven adaptability and commitment to maintaining its competitive edge in an increasingly complex global economic environment.