Fiscal consolidation, climate-smart investment key to sustaining Malta’s long-term prosperity – KPMG

A report by KPMG has outlined points which it says are key to sustaining Malta’s long-term prosperity.

The report titled “Beyond GDP - Sustainable Economic Growth in Island Economies,” was drawn up by KPMG’s Islands Group. It underlines the unique pressures island economies like Malta face, and also urges policy makers, investors and businesses to reconsider how they measure economic success, and how they manage it across island economies. The findings span 12 jurisdictions, 11 of which are islands including Malta.

The report contains key strategic recommendations for the jurisdictions, including Malta. The report outlines that Malta’s rapid, tourism-driven growth is supported by strong investment in human and physical capital. However, it states that the country faces a number of challenges from the fiscal angle, demographic pressures, infrastructure bottlenecks, and energy risks. It said that this makes fiscal consolidation, climate-smart investment, and institutional reforms key to sustaining long-term prosperity.

The report also highlights the importance of progressing Malta Vision 2050 through a clear delivery plan across digital innovation, infrastructure, education, healthcare, sustainability, and quality jobs.

It also proposes a review of fixed energy pricing and urges the country to consider targeted support, restoring price signals to drive efficiency and investment, as a strategic priority. It highlights the need to maintain strong investment as a share of GDP, and reverse the drop between 2021–22, by prioritizing climate-smart infrastructure and productivity-raising projects.

It also proposes investment in institutional capital and reputation, by strengthening transparency and regulation, and closing gaps on EU rule-of-law benchmarks to support finance and digital services competitiveness.

Malta also features in the report's ‘policy in practice’ examples. The report highlights Malta's success in broadening its economic base through the development of multiple sectors, including tourism, financial services, manufacturing, real estate, technology, shipping and aviation. It also identifies Malta as a leading example of robust and internationally recognised data infrastructure.

KPMG Director Steve Stivala said: “We believe that this report comes at a critical moment; global instability and rapid change have increased risks for small island economies like Malta which are generally less diversified and often more exposed to economic shocks. At the same time, slowing global growth and widespread demographic changes are compounding these challenges across multiple jurisdictions.”