Last Updated on Friday, 21 July, 2023 at 8:42 am by Andre Camilleri
As I am writing this article, Malta is being hit by a heatwave. As it has become customary, when temperatures rise and everyone turns to their air conditioner, day and night, parts of Malta end up without electricity due to an overload of various parts of the electric distribution system. It’s a clear signal of the fact that our electric distribution network cannot cope with the demand.
On the 11th July, NSO published the latest data on Malta’s population. It showed that Malta’s population hit 542,051 by end 2022, meaning that in just one year, from end 2021 to end 2022, Malta’s resident population grew by 21,798 persons or 4.2%. Where did this increase come from? 83% of the increase came from Third country nationals coming to Malta and 12% of the increase come from EU Nationals coming to Malta, in 2022.
Another statistic is the stock of licensed motor vehicles in Malta. By end Q1 2023 we had over 426,000 licensed motor vehicles. This means that in the space of 3 years, we had an increase of over 29,000 in the stock of licensed motor vehicles, an average close to almost 10,000 per year.
These are strong indicators of the core issues with Malta’s economic model, which then puts huge stress on the country’s infrastructure, be it electricity distribution, the road network or public health services.
To maintain sustainability in public finances and make sure that our total public debt remains within 60% of GDP, we need to make sure that our economy keeps growing. In 2023 budget, the forecast was that Malta’s GDP is to grow to the level of €19.8billion (€18.7billion when taking into consideration inflation which is 14.7% higher than 2022).
In 2022, GDP amounted to €16.3billion and total employment amounted to 291,000 resulting in a GDP per employee of €56,150. If productivity increased by only 1% per annum (the average between 2010 and 2022 stood at 0.6% per annum) and participation rate stands at 54% (53.7% in 2022), population will have to increase to 598,102 by 2025 to attain the forecasted GDP growth. That is an increase in population of 56,051 or 10.3% over the population amount by end 2022 population.
On the other hand, we can obtain the projected economic growth and maintain the population amount on the same levels of end 2022, if we managed to achieve a 4% increase in productivity per annum. This clearly indicates the urgent need for Malta to restructure its present economic model and focus on how we can build an economy focused on more value added output that would require less persons to achieve the targeted economic growth.