Prostitution and illegal drugs contribute some €20 million to the local economy, according to the National Statistics Office.

The amount was added to the island’s €7.2 billion GDP figure for 2013 last week as part of an EU-wide review of national accounts systems.

According to details of the review given to Times of Malta, less than one per cent of the population were engaged in the prostitution industry.

Figures on how many were involved in the importation and sale of narcotics were unavailable.

NSO director general Michael Pace Ross told this newspaper that the new figures provided a first glimpse of the effects of the unobserved economy and helped build a truer picture of the national economy.

“GDP is about calculating transactions, when funds are exchanged between two or more consenting parties for a product of service. So, including these figures gives a better picture of the economy in terms of legal and illegal transactions,” he said.

The estimates had been compiled in the past but had never been published as part of the national accounts, he added.

Joseph Bonello, who worked on compiling the new data, said that ,while the figures were only estimates, they were based on months of research as well as collaborative efforts with local authorities.

Including these figures gives a better picture of the economy in terms of legal and illegal transactions

“The NSO reviewed literature on these activities, including past studies on licit and illicit drugs as well as the national report on the abuse of drugs.

“We also obtained the average street prices by type of drug from the authorities,” he said

Law enforcers had confirmed that no drug production facilities existed on the island. This, he said, meant that the drug economy was an import heavy one.

The prostitution figures, meanwhile, were more difficult to compile. Mr Bonello said data on the subject was very limited and the NSO was forced to form estimates based on the average number of prostitutes in other European countries.

Despite this, Mr Pace Ross said a distinction needed to be made between different types of prostitutes; much like the categories used for different drug types.

“There are those working the streets, others in hotels and those in clubs, all of whom offer different services at different prices.

“We liaised with professionals working in the field to better understand this sector,” he said, adding that the slice of the profits taken by pimps also had to be taken into consideration.

Earlier in the summer, Mr Pace Ross had said the increase was only going to be a minor one, and would be much smaller than that of other member states.

The review will account for a number of other black market activities and Mr Pace Ross estimates the GDP figure will rise by two per cent when they are all introduced.

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