Investment drives strong economic growth

Investment was the main contributor to economic growth in 2015, which according to the Malta Country Report 2017 published by the European Commission reached exceptional levels in 2014-15 and was among the highest rates in the EU.

The report assesses Malta’s economy in the light of the European Commission’s Annual Growth Survey published in late 2016, which calls on EU Member States to redouble their efforts on the three elements of the virtuous triangle of economic policy — boosting investment, pursuing structural reforms and ensuring responsible fiscal policies.

Within this context, the report makes country-specific recommendations and analyses the latest developments across a variety of factors affecting the country's economy.

Amongst others, the report notes that there has been progress with improving the business environment and that various initiatives have been put in place to improve access to finance for SMEs. In addition, several measures were recently implemented to simplify the procedural burden of starting new businesses. Important steps have also been taken to strengthen the research and innovation (R&I) system.

Recent data points to sharp improvement in labour productivity. The report, however, observes that the evolution of labour productivity is linked to the structural transformation of the economy in recent years, and the latter requires more investment in knowledge and intangible assets to sustain productivity growth in the future.

While noting that Malta remains a leading EU Member State in the supply of e-government facilities, the report comments that public sector efficiency is performing below its potential even though it is still higher than neighbouring Member States.