Malta: 2025 Article IV Consultation-Press Release; and Staff Report

The 2025 Article IV Consultation highlights that Malta’s economy has expanded rapidly over the past decade, with per capita income nearly doubling since 2013, supported by strong growth in tourism, online gaming, and professional services, alongside large inflows of foreign workers. This labor‑driven growth model is expected to continue in the medium term but will gradually slow as Malta’s high population density limits further expansion of the labor force through immigration. Without timely policy and structural reforms, this demographic constraint would weigh on potential output. The key policy priority is to preserve macroeconomic stability while transitioning toward a productivity‑driven growth model. This requires a medium‑term fiscal strategy that balances deficit reduction with targeted, pro‑growth investment, supported by improved value-added tax efficiency, stronger revenue administration, phased withdrawal of untargeted energy subsidies, and enhanced public investment management. Continued financial sector vigilance, strengthened supervisory frameworks, and broad structural reforms—especially in labor markets, innovation, judicial efficiency, and climate resilience—are essential to sustain long‑term growth and resilience. .