Malta: Country and Foreign Investment
Economy and Currency
Malta is less affluent than its European neighbours. The economy is heavily dependent on tourism, which accounts for 35% of GDP; there are about 1.2 million visitors a year. Manufacturing industry represents about 25% of GDP. GDP per head is about USD27,500 (2012 est), at the lower end of the range of EU figures, but roughly equivalent to Cyprus, and above those of the other new EU member states. GDP growth in 2011 was estimated at 2.1%, and rose by an estimated 0.8% in 2012.
Unemployment had risen to 6.2% in 2010. In 2012 and 2011 the figure was 6.4%. Inflation in 2011 was estimated at 2.7%, whilst in 2012 this was estimated to have reduced to 2.4%. The government deficit reduced to below 3% of GDP in 2012, after running at 3.6% in 2011 and 2010.
Exports are rising, but with limited agricultural land and wholly lacking in energy resources, Malta inevitably imports a great deal.
With GDP below 75% of the Community average, the Commission said in 2006 that the entire territory of Malta will continue to be eligible for regional investment aid at a maximum aid intensity of 30% of the eligible costs. For the period 2007-2013, Malta expects to receive EUR840 million regional aid to deliver growth and jobs.
The Central Bank of Malta used to apply exchange controls under the terms of the Exchange Control Act 1972. Current transactions were freed from exchange controls in 1994; capital controls were removed in 2004 as part of EU entry. The Maltese corporate forms likely to be used as offshore or non-resident entities were in any case all exempt from exchange controls. See Offshore Legal and Tax Regimes for further details.
In May, 2005, Malta was accepted into the EU's ERM (Exchange Rate Mechanism), setting the country on a path towards full adoption of the Euro as from January, 2008. The Council fixed the equivalent rate for the Maltese lira at 0.429300 for one euro.
Interest rates used to be controlled in Malta, but were effectively liberalised in 1995 when the Central Bank increased the ceiling on lending rates to 10% above the discount rate. There remain some controls on interest rates on loans for the purchase of residential property.
In a 2008 report, the IMF statement said that the Maltese authorities must be commended for the successful adoption of the euro on January 1, 2008, calling it "a crucial landmark in their growth-oriented reform agenda".
This agenda appropriately aims at leveraging Malta's strengths and income-generating potential through closer integration in the European and global economies, the IMF suggested.
The Maltese economy continues to be buoyed by significant growth in the island’s financial services sector, which recorded a 30% growth during 2010, despite the difficult situation in the sector internationally; recorded growth for 2009 was 22%.