Malta has been an EU member state since 2004 and is part of the Schengen area. It has been a member of the Eurozone since 2007. It is also a member of the Commonwealth having obtained independence from the United Kingdom in 1964. In view of its geographical location at the crossroads of the Mediterranean, Malta enjoys strong cultural and business ties with North Africa and the Middle-East.
The Maltese economy has thrived since joining the EU. It ranked 38 overall (out of 141) in the World Economic Forum Global Competitiveness Index 2019 Rankings and has been one of the fastest growing countries in the EU in recent years.
Key industry sectors include tourism, banking and financial services (including e-financial services and fintech), igaming, manufacturing, real estate, aviation, maritime services and logistics, while blockchain technology is an emerging industry.
In 2019, real GDP in Malta rose by 4.4% (2018: 7.3%) compared to 1.2% in the Euro area, confirming Malta’s position as one of the most dynamic economies in the EU. However, together with the rest of the World, the Maltese economy, in particular tourism and external trade, has been impacted by the COVID-19 pandemic leading to a projected contraction of 7.3% in Malta’s real GDP, compared to a projected contraction of 7.8% for the Euro area in the same period, according to the European Commission’s European Economic Forecast Autumn 2020.
Depending on the evolution of the pandemic, a recovery is projected in Malta’s GDP growth in 2021 of 3.0% and in 2022 of 6.2%, to reapproach its 2019 GDP level.
Government finances registered a surplus in 2017, 2018 and 2019 but were impacted by the pandemic in 2020 resulting in a deficit of around 9.5% of GDP in 2020. The economic recovery projected for 2021 is expected to contribute to a decline of the deficit to around 6.2% of GDP as several pandemic-related fiscal measures will continue to affect public finances, with the deficit forecast to decline further to just below 4% of GDP in 2022.
Malta is an attractive destination for foreign direct investment with Malta Enterprise, the government agency promoting inward investment into Malta, providing a number of business support schemes. This is especially so in the ICT, advanced manufacturing and life sciences industries. Malta’s system of taxation and its network of over 70 double taxation treaties, its membership of the EU and the Eurozone together with its robust legal and regulatory framework make it a key location for international corporate structuring and investment into Europe in the asset management and private equity industries.
While Brexit will lead to less beneficial UK-EU trading relations, the EU-UK Trade and Cooperation Agreement applicable since 1 January 2021 has avoided a “no deal” scenario. Moreover, Malta’s important and long-standing relationship with the UK, as an EU member state and a member of the Commonwealth, together with its English-speaking population and proximity by air to most European cities, including London, make it an obvious choice for British businesses seeking to relocate to an EU jurisdiction.