Strong domestic demand propels Malta’s economic growth in Q3 2024

Malta’s economy continued its upward trajectory in the third quarter of 2024, with provisional estimates showing a Gross Domestic Product (GDP) of €5.9 billion – this marks an increase of €435 million compared to the same period last year, with growth in volume terms standing at 4.9 per cent.

The increase in GDP was propelled by positive contributions from various sectors, as measured using the production approach, which assesses economic output by summing gross value added (GVA).

In volume terms, GVA rose by 5.7 per cent, supported by growth in several key sectors. Service activities made the largest contribution, adding 3.4 percentage points to GVA growth, driven by expansions in professional, scientific, and technical activities (9.3 per cent), accommodation and food services (18 per cent), and real estate activities (5.7 per cent).

Industry also contributed positively, adding 1.3 percentage points to growth, while agriculture and fishing made a smaller but still significant contribution of one percentage point.

The expenditure approach, which calculates GDP by summing final consumption expenditure, gross capital formation, and net exports, highlighted the importance of domestic demand. It contributed 4.9 percentage points to the year-on-year GDP growth in volume terms, while external demand had a neutral effect.

Final consumption expenditure rose by 6.3 per cent, reflecting robust domestic spending, gross fixed capital formation, a measure of investment, increased by 5.3 per cent, and exports and imports of goods and services both grew by 3.8 per cent in volume terms.

The income approach provides insight into the distribution of the €435 million GDP increase. Compensation of employees rose by €233.6 million, highlighting Malta’s strong labour market.

Gross operating surplus and mixed income increased by €211 million, while taxes on production and imports, net of subsidies, recorded a minor rise of €0.3 million.

Gross National Income (GNI), which adjusts GDP for net income and taxation received from abroad, was estimated at €5.2 billion for Q3 2024.

The GDP deflator, a measure of price changes within the economy, increased by 2.9 per cent year-on-year, a slowdown compared to the 5.5 per cent recorded in Q3 2023. This indicates moderating inflationary pressures as Malta balances robust growth with price stability.

Malta’s third-quarter GDP results reflect a resilient economy, supported by vibrant service sectors, strong domestic demand, and steady investment. With services like accommodation and food activities growing by 18 per cent and significant contributions from professional services and real estate, the island remains on a path of sustained economic progress.