Malta - Economy

Overview: Malta has a small domestic market, produces only about 20% of the food it needs, and has no raw materials, a limited supply of fresh water and no energy resources other than solar energy. Its only resources are its ports and its educated and skilled people. Development has been based on shipbuilding and repairing, manufacturing for export, tourism, and, more recently, freeport activities and financial and business services.

In 1979 the UK military base (a major employer and generator of government revenue) closed; consequently the 1980s global recession leading to a worldwide collapse of shipbuilding hit Malta particularly hard, and there were numerous factory closures.

During the 1990s, the public sector was reduced and state enterprises privatised. Expansion of tourism and liberalisation of investment, international trade, fiscal policy and the financial services sector led to steady growth, averaging nearly 5% p.a. over the decade.

The long period of good, steady growth came to an end in 2001, as export demand fell and the economy stalled during 2001–04. After four years of stagnation, growth resumed at 3.3% in 2005 and 3.4% in 2006.

Malta joined the European Union in May 2004 and adopted the euro currency in January 2008, replacing the Maltese lira.

Trade: Principal exports are machinery, transport equipment (particularly electronics), manufactured goods and clothing. Principal imports are capital and consumer goods, food, chemicals and fuels. The EU is the main trading partner, accounting for more than 50% of exports and some 70% of imports. Main export partners are the USA, Italy, Germany, France and the UK; import partners are Italy, France, the USA, the UK and Germany.