Data published by the National Statistics Office provides information on the way the structure of the Maltese economy has evolved from 2000 to 2019. The data is provided both in real and in nominal terms. One can also look at data that includes 2020 and 2021, but one needs to keep in mind that these years were heavily impacted by the coronavirus, and as such were out of the norm.
Therefore, I will stick to the period 2000-2019, a period that was characterised by five governments, the country’s accession to the EU, the adoption of the euro, and the individual investors programme (or as it is sometimes referred to, the sale of passports scheme). I will focus on the numbers after accounting for inflation.
It needs to be stated at the outset that this changing face of our economy has some good beauty spots and also some bruises. Whether this change will eventually yield positive long-term sustainable results remains to be seen. For sure, it has yielded good short-term results.
Overall, gross value added doubled in real terms between 2000 and 2018, and increased further in 2019. We had growth every year, and in the two years when we had a shrinkage of our economy, this coincided with a slowdown in the global economy.
One also needs to note that the population increased from 390,000 in 2000 to 514,000 in 2019. The growth in the economy was also due to this growth in the population and given our size and the high population density, it would be more than legitimate to ask whether this economic growth is sustainable.
The strongest performing sectors of our economy during this 19-year period were professional, scientific and technical activities, and administrative and support service activities; and retailing, distribution, transportation and hotel and restaurant activities.
The former sector grew from €355 million to just under €2 billion. This is what we call in common parlance the financial services sector, which is not to be confused with financial and insurance activities, which include banking and insurance, in the main. The sustainability of this sector needs to be kept under watch as it depends heavily on the country’s reputation and the country’s tax system.
Retailing, distribution, transportation, and hotel and restaurant activities was the largest sector in 2000 and remained so in 2019, growing from €1.3 billion to €2.3 billion.
We need to determine how we would like to change the face of our economy over the next 10 years or so. This depends on the decisions we make today
The construction sector increased from €322 million to €456 million, highlighting the strong − even if invasive with all its negative externalities − activity in this sector. However, to highlight the speculative element of the construction sector, the data we need to look at is real estate activities.
In 2000, real estate activities amounted to €291 million, therefore, were less than those by the construction sector. By 2019, real estate activities had risen to €657 million, outstripping the construction sector by €200 million. This answers the question as to who made the money from all this building development – the speculators and no one else. Long-term action is required for two reasons: to address a gross social injustice and to wean off the economy from such activities.
Looking at what we traditionally called the productive sectors, agriculture and manufacturing, the picture that emerges is not a nice one to look at. Agriculture and fishing activities increased from €78 million to €89 million, after it reached a peak of €128 million in 2006. Manufacturing increased from €792 million to €911 million, a small growth rate compared to the rest of the economy.
ICT has been a success story, having grown from €164 million to €880 million. Yet another success story is the arts, entertainment and recreation sector, which incorporates i-gaming activities. This grew from €244 million to €915 million.
The data on investment also has beauty spots and bruises. Investment in intellectual property products increased from €65 million to €483 million. Investment in machinery and equipment nearly doubled, but investment in buildings and dwellings increased by nearly two-and-a-half times.
All these numbers reflect what we have achieved as a country in the first two decades of this century. It may be too tempting to rest on one’s laurels where such laurels exist.
On the other hand, the management of an economy is not about managing our past but managing our future. We need to determine how we would like to change the face of our economy over the next 10 years or so. This depends on the decisions we make today.