Country study : Malta

Abstract

The Republic of Malta is a small, open economy with strong trade ties to the EU and accepted for EU accession in 2004. Malta has a population of around 383,000 and a labour force of just over 156,000. Its Gross Domestic Product currently stands at just over one half of the EU average on a per capita purchasing power parity basis, making Malta an Objective One country for the purposes of EU development Funds. In view of the absence of natural resources and the smallness of the domestic markets, Malta's imports, exports and gross capital flows each amount to over 100% of its GDP, of which over one half are undertaken with the EU. Following a period of rapid real GDP growth during the first half of the 1990s - when it averaged 6% per annum - partly stimulated by fiscal expansion, the Maltese economy currently faces the twin problems of an excessively large fiscal deficit and a slowdown in economic growth, which at an average of 4% per annum over the past five years remains significant but insufficient for a country in Malta's state of development. If persisting, these factors could jeopardise the process of economic convergence to the EU.