The system functions in such a way that, in a by-election, all candidates who fall during the counting process start from zero if the candidate ceding the seat was elected with no inherited votes from other candidate, irrespective of their first preference votes given to them by the electorate. Moreover, the reachable quota is half the official quota in the district plus one. The system is somewhat complex because, in the case of the seat vacated by Dr Grima, all candidates started at zero, and the same applied to that of the Prime Minister. However, if the ninth district had been counted before the second district, I would have started with 340 votes that I had transferred to Dr Falzon before my name fell on the day of the counting. This is a tricky part, and I would like to explain it further. On the day of the casual election, the Electoral Commission, in agreement with the Party’s representatives, follows a draw. It is literally like a Super Five chance. The order in which the districts of those who ceded their seats are counted is determined by sheer luck.

In my case, the first counting started with the seat vacated by Dr Grima, in which Rebecca Buttigieg was elected ahead of me with almost 90 votes. Then the second district followed, which was the seat vacated by the Prime Minister. In this case, I was not expecting to be elected after a few counts because the strategy employed during my campaign was to ask for the third and fourth preferences of other co-candidates rather than the second preference. The reason was that the first preference was always expected to be given to the Prime Minister, and the second preference to candidates who had toured and worked the district longer than I had. However, the game changer was the third and fourth preferences, which I asked many of my supporters and people on the ground to give me for an eventual by-election. And those were the third preferences of Ministers Clyde Caruana, Byron Camilleri and others. Indeed, the strategy worked, as I managed to garner most of the third preferences of the other candidates, in addition to extra second preferences after the Prime Minister. When the by-election of the Prime Minister opened, I was at around 1,250 votes. In the final count, I was elected from the second district, taking the seat vacated by the Prime Minister. Indeed, I am humbled.

After the second district was counted, the ninth district ensued. Obviously, my name was eliminated from the ninth district since I had already been elected on the second district. This opened the space for other candidates, in particular the mayor of Għargħur, Mariah Meli, who was the runner-up. If the ninth district following the by-election of Dr Falzon had been drawn to be counted before the second district, the story would have been different. Why? Because I would have been elected from the ninth district, while in the second district there would have been another name, given that my name would have been eliminated from the second district. Therefore, in truth, luck does favour you in such instances. This process is somewhat complex, and for this reason strategies differ from one candidate to another. In my case, since I submitted my nomination as a PL candidate later than others, it was not easy to compete in a district known for the big names. However, given that my profile and branding were already public due to the MEP elections campaign two years earlier, people seemed to have responded and voted for me as well, even if they were third and fourth preference. In truth, in the MEP elections I had around 36,000 second and third preferences and leveraged on this. Besides, I kept on listening to people’s concerns over the past two years and tried my best to assist where it was merited.

Certainly, I must thank the people who helped me achieve this result in just 21 days. We were a small group of volunteers across both the second and ninth districts. I did not even have an office when I submitted my nomination. In fact, we met at a restaurant in Marsaskala to devise a plan on how we would proceed with the campaign. Gradually, people started joining the team. We managed to achieve remarkable results in 21 days, even setting up my office in Bormla, which I own and which had been in a bit of a dilapidated state for two years. Thanks to my brother and a childhood friend, we completed it in a week. I must express sincere gratitude to several people, especially three close friends in the ninth district who truly supported me, and together we managed to garner around 562 first-count votes in that district. The people of the ninth district received me with enthusiasm, and that is something I truly cherish. It is a district that I will continue to represent for the next five years, just like the second district.

Lastly, I would like to make an appeal to those who were not elected. I firmly believe that you still have a lot to contribute. Had I given up after the MEP elections, I would not be here today. It is true that I was not originally planning to run for the current general election, and it is equally true that I was in the background supporting the PL. However, when the Prime Minister asked me several times to put forward my name as a candidate, I accepted. In the end, when the Party calls, we all contribute. Whether we contribute as frontline candidates, in logistics, customer care, or social media, we all play a role. And that is what truly matters. Your contribution is certainly valuable.

The post When loyalty is rewarded – thank you, Districts 2 and 9 first appeared on The Malta Business Weekly.

Compiled via the Short-Term Quarterly Economic Forecasting Model (STEMM), official figures project Malta’s real GDP to expand by 3.7% in 2026. This aligns perfectly with projections from the IMF and the Central Bank of Malta. However, underlying drivers have mutated significantly. Output in 2026 is driven entirely by domestic demand (+3.8 pps), while net exports act as a drag, subtracting 0.1 pps . This dynamic reflects a deteriorating international climate triggered by military conflict in the Middle East from late February 2026, which closed the Strait of Hormuz and disrupted global shipping lanes.

While Malta’s direct trade exposure to the Gulf region is minor—representing 2.5% of goods exports (€84.6 million) and 0.7% of imports in 2025 —secondary transmission channels are pronounced Surging transport costs, freight shocks (reflected in a 20%+ increase in the Baltic Dry Index), and supply chain disruptions penalize primary trading partners. Growth projections for major Eurozone markets, particularly Germany (which commands 20% of Malta’s total export demand), have been sharply downgraded, compressing external demand for Maltese goods and service.

While validating headline GDP, the Council highlights explicit concerns regarding the balance of domestic expansion, noting strong tension between projected investment and consumption patterns.

• Private Consumption (+3.9%): Highly resilient, backed by a tight labour market, public-sector collective agreements, and revised parental tax brackets.

• Gross Fixed Capital Formation (+6.5%): MFIN expects a major turnaround from recent investment contractions, driven by an ambitious nominal public investment target of €900 million (+18.6% nominal increase) and robust private sector expansion (+7.0%).

• Government Consumption (+5.7% Real / +8.0% Nominal): Elevated, led by a 4.1 pps expansion in employee compensation, though decelerating slightly from 2025.

The Council cautions against institutional over-optimism. Over the past three fiscal years, actual public investment consistently fell short of targets by an average of €200 million annually, hitting a rigid delivery ceiling of roughly €750 million per year. This reflects deep capacity constraints and execution challenges across advanced infrastructure programs. Conversely, notable upside risks reside in general government consumption. State models assume intermediate consumption growth will fall to 4.1%, contradicting the 16.2% average annualized growth seen over the past three years. Given relentless demand pressures across state medical systems and public service contract indexing, the Council expects government consumption to exceed estimates, offsetting underperforming capital outlays.

Malta’s 2026 data reveals a deeply embedded structural contradiction—a core friction in the current economic architecture. This friction is best understood through cost-driven pricing pressures, full employment tightness, and the business cycle output gap.

Headline HICP inflation is projected to reach 2.9% in 2026, a 0.7 percentage point upward revision from autumn baselines . Crucially, this spike is not an excess demand byproduct; it is purely cost-driven and structural, reflecting global import pipeline shocks. Rising freight metrics (the Baltic Dry Index jumping over 20%) and a 50% spike in international agricultural fertilizer costs have driven up production cost bases globally. Core inflation tracks closely at 2.8%, proving that import pipeline pressures flow steadily into local services and consumer goods Malta’s headline rate would be much higher without state intervention as government maintains strict price caps on domestic energy utilities and retail fuel via open-ended fiscal subsidies. While this shields household budgets, it shifts a heavy financial burden onto the state balance sheet, generating an accumulating fiscal liability demanding future consolidation.

Simultaneously, the labour market runs exceptionally hot, featuring historic highs in labour utilisation and negligible slack. Full-time equivalent employment is forecast to expand by 3.6% in 2026, absorbing a net 12,326 workers into the economy  and holding national unemployment at an ultra-low 3.2%. Because the domestic labour supply is fully utilised, this relentless demand has triggered robust wage acceleration (+4.4% nominal compensation per employee). Furthermore, since local headcount cannot expand organically, further expansion relies entirely on foreign inward migration, worsening spatial and infrastructural strains.

The core of the MFAC report is a detailed critique of Malta’s long-term reliance on factor accumulation—specifically demographic expansion—to fuel GDP growth. Over the last decade, real GDP growth averaged an exceptional 6.5%, driving a successful real convergence that brought GDP per capita to approximately €35,000 in 2025. However, a decomposition of this growth shows that it was disproportionately driven by labour supply increases rather than structural efficiency. Between 2015 and 2025, expanding labour force participation accounted for 2.0 pps of real GDP growth, while raw population growth contributed 2.8 pps. In sharp contrast, labour productivity per hour worked contributed a modest and highly volatile average of only 1.6 pps.

Because Malta’s labour force participation rate (82.6%) now significantly exceeds the EU average (75.7%), the historical cushion of activating underrepresented demographics has largely been exhausted. To sustain a baseline growth rate of roughly 4.0% under the current structural model, Malta would require an unsustainable net influx of 14,000 new workers every year . To avert the resulting capacity constraints, the Council outlines two explicit, binding recommendations.

Recommendation No. 1: Transitioning to Productivity-Led Growth. Malta must break its structural dependence on demographic expansion. In several high-growth periods (including 2016, 2018, and 2019), labour productivity growth actually turned negative, proving that economic expansion was achieved by adding raw hours rather than generating efficiency gains. The Council emphasizes that future policy must pivot entirely toward maximizing output per hour worked. This requires a comprehensive strategy across education and training to resolve deep skills mismatches in the local economy. It also requires targeted labour market strategies that encourage job mobility away from low-margin, labour-intensive activities and toward high-value-added sectors.

Recommendation No. 2: Scaling Up Productive Investment & Capital Intensity. A primary driver of labour productivity is capital intensity—the volume of advanced technology, equipment, and modern infrastructure backing each worker. Malta’s aggregate capital intensity remains low relative to peer EU economies, limiting its capacity for structural efficiency. The Council advises a clear reallocation of capital away from short-term consumption expenditure and into productive investment. While Malta performs well in software and database acquisition, its domestic investment in Research and Development (R&D) is critically low, standing at an investment-to-GDP ratio of just 0.3% . Policy efforts must prioritise :

• Broadening fiscal incentives, such as accelerated tax depreciation and investment tax credits, to support the rapid adoption of digital technologies, automation, and cybersecurity.
• Encouraging the private sector to leverage advanced AI-related technologies to optimize production and service delivery streams.
•  Mobilising public capital to execute the ‘twin transitions’ of deep economy-wide digitalization and environmental sustainability.
• Optimising the quality and composition of public expenditure to crowd-in high-value private investment, thereby easing structural bottlenecks without generating fiscal waste.

The Malta Fiscal Advisory Council’s 2026 assessment confirms that while the nation’s immediate economic momentum is secure, its long-term resilience cannot rely on population growth. Transitioning from factor accumulation to a high-efficiency, capital-intensive economy is no longer optional; it is a structural necessity. By channeling public and private capital into R&D, structural digitalization, and targeted human capital development, Malta can protect its competitive edge, preserve its fiscal sustainability, and build a highly resilient economy capable of thriving through future global shocks.

The post The needed paradigm shift first appeared on The Malta Business Weekly.

As oil trading resumed after a brief pause in fighting, the price of Brent crude, the global benchmark, reached nearly $120 a barrel. It is up by 42% since hostilities began. The Iranian regime, despite more than 120 days of being bombed and blockaded by the world’s top military superpower and its Israeli ally, is emboldened.

Claiming that talks with Iran had been “brought to the highest level of Iranian leadership and approved,” Trump said he had “cancelled the planned strikes and bombings against Iran last week.” In response to the US strikes, Iran’s Islamic Revolutionary Guard Corps struck US targets on bases in Kuwait and Bahrain and hit and partially destroyed Sheikh Isa Air Base. Nothing is stopping the Iranian state from retaliating against its Western invaders.

Only recently, Iranian media said the army had conducted drone strikes targeting communications antennas and radar facilities belonging to the US Fifth Fleet in Bahrain. Add to this a recent air raid alert issued in Bahrain, where residents were urged to head to the nearest safe place. Notice how Kuwait temporarily closed its airspace as its military said its air defence systems were working to intercept hostile aerial targets.

In response to the US strikes, Iran partially destroyed Sheikh Isa Air Base. Readers may ask: what was the effect of the effective closure or minimal traffic in the Strait of Hormuz since early 2026? The short answer is that it has forced production curtailments and highlighted vulnerabilities.

Yet, the flow of oil out of the Gulf needs alternate routes, so many attempts are underway to dig and lay new delivery pipelines that circumvent the export of crude through the Strait of Hormuz. One such project, code-named ADNOC, was approved in mid-May 2026 by Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed. This is not a walk in the park, since construction in a tense region carries security and logistical risks, though parallel routing leverages existing rights-of-way for faster build times.

Long-term, this re-routing of crude encourages diversification but does not fully eliminate global market expectations. One cannot omit mentioning Saudi Arabia’s East-West Pipeline (Petroline). This is a mature, high-capacity bypass system that has been rapidly ramped up and proven resilient during the 2026 Hormuz disruptions, contrasting with the UAE’s ongoing expansion of its smaller-scale Fujairah route.

Saudi Arabia’s system is much larger (7 mb/d versus the UAE’s current 1.5–1.8 mb/d, growing to a future 3.6 mb/d). Naturally, this reflects Saudi Arabia’s vastly higher production base. It provides immediate, battle-tested relief. Together, both pipelines, when fully operational, mitigate but do not fully replace Hormuz volumes (about 20 mb/d pre-crisis). Saudi Arabia benefits more from short-term export continuity, yet the UAE’s expansion aligns with its capacity ambitions.

These efforts build on existing infrastructure but have been accelerated due to the ongoing Strait of Hormuz disruptions. Pressure is mounting on Trump to solve the dispute, particularly from American motorists now paying over $5.10 for a gallon of petrol on average.

Let us look for an alternative crude supply away from the troublesome Gulf area. Can the eastern and central Mediterranean basin prove to be an alternative source? The answer is not in the next decade. In fact, there is a low and declining share of oil produced from the central Mediterranean area (offshore around Sicily and the Sicily Channel). This represents a relatively small part of overall crude-oil output.

Most of Italy’s domestic oil production in recent years has been onshore (notably Basilicata – e.g., Tempa Rossa) and in the Adriatic Sea. One can deduce that the central Mediterranean offshore plays a minor role by volume compared with Gulf areas. Eni is the major Italian player in offshore hydrocarbon activity, including exploration and production around Sicily. Other companies and operators may hold smaller stakes or operate onshore and in the Adriatic; however, Italy is a substantial net importer of crude and petroleum products.

There has been ongoing exploration interest, including licence rounds and seismic surveys such as those in Malta, in the central Mediterranean. However, successful large oil discoveries and subsequent high-volume production in the central Mediterranean have been limited. Much of the recent investment has focused on gas rather than crude extraction. Regulatory sensitivities and public opposition surrounding offshore drilling – particularly concerning coastal tourism, fisheries, and environmental concerns – limit easy expansion in nearshore zones.

Back to the fragile situation of crude deliveries out of Hormuz, one expects that a short-term solution is to bypass it via pipeline installations, yet this takes time. In a post-resolution scenario, these would complement the reopening of the Strait by providing redundant and secure export routes.

In summary, can we conclude that oil riches have once again spurred a second turbulent Gulf war?

The post Oil again is the cause of global turbulence first appeared on The Malta Business Weekly.

For many years, the University of Malta has conducted scientific studies on vehicle emissions, including hydrocarbons, volatile organic compounds, carbon monoxide, carbon dioxide, nitrogen oxides, particulate matter and sulphur oxides. Since the 1950s and 1960s, regulatory agencies worldwide have studied vehicle emissions and their effects on human health and the environment. As understanding improved, so did the technologies used to reduce emissions. In the United States, amendments to the Clean Air Act introduced increasingly strict pollution limits.

Air pollution is estimated to cause between seven and eight million deaths worldwide each year. Numerous studies have identified particulate matter as one of the most dangerous pollutants. Malta faces particular challenges because of the large number of private vehicles using its narrow streets. This contributes to greenhouse gas emissions, fossil fuel consumption, traffic congestion and a shortage of parking spaces in many towns and villages.

Following its re-election, the Labour government has preferred not to burden commuters with parking charges in urban centres. However, the licensing authority continues to increase the number of registered vehicles, with a net average growth of 37 vehicles per day. The majority of newly-licensed vehicles, 4,737 or 59.8%, were passenger cars, followed by motorcycles, e-bikes and PA-bikes, which accounted for 1,989 or 25.1%.

Petrol-powered vehicles represented 58.1% of the total stock of licensed vehicles, followed by diesel-powered vehicles at 34.6%. Electric and plug-in hybrid vehicles accounted for only 4.3%. Compared with the first quarter of 2025, plug-in hybrid diesel-electric vehicles increased by 7.2%, electric vehicles by 6%, and mild hybrid petrol-electric vehicles by 5.1%.

Only a radical rethink of Malta’s transport system, moving away from heavy dependence on private vehicles, will reduce road deaths and allow transport to function more efficiently. However, with the country facing moderate national debt, efforts are being made to contain recurrent expenditure and reduce capital investment. The Opposition argues that this approach prioritises today’s comfort over tomorrow’s well-being.

During the second quarter of 2025, the stock of licensed vehicles increased by a further 3,339. Outdoor air pollution continues to result primarily from the burning of fossil fuels, including LNG used by the BWSC and Electrogas power plants, as well as diesel-powered generators and transport. Unless stricter measures are introduced to reduce internal combustion engine vehicles and replace them with electric alternatives, the problem will persist.

One possible solution lies in shared mobility. The concept of passenger transport based on shared vehicles rather than privately-owned cars originates from sustainable mobility research. Fewer vehicles on the road would reduce energy consumption and emissions, although the energy required to reposition empty vehicles must also be considered.

Robo-taxis offer a promising alternative, particularly if powered by electricity or hydrogen fuel cells. Once fully tested and deployed, they could reduce operating costs by eliminating the need for a human driver, making transport more affordable and increasing the popularity of transportation as a service. Studies indicate that robo-taxis have fewer accidents than human drivers and therefore have the potential to save lives. Unlike private cars, they can operate almost continuously, freeing urban space and improving quality of life.

The rise of robo-taxis raises important questions for Malta. What happens to the thousands of licensed “Y-plate” taxis if autonomous vehicles become widespread? One possible solution would be for Transport Malta to introduce a scheme allowing existing Y-plate vehicles to be retrofitted with sensors and autonomous technologies, supported through partial public funding.

Some may fear that taxi drivers and TCN operators are doomed. However, experience elsewhere suggests otherwise. In San Francisco, the rise of autonomous vehicles has increased overall demand for taxi services and created opportunities in specialised market segments. Official data shows that in 2024 employment in taxi and limousine services increased by 7% compared with the previous year, while total industry pay rose by 14%. Traditional taxi trips also remained broadly stable.

As more self-driving vehicles enter the market, they may expand rather than shrink the transportation sector. Europe has adopted a cautious approach, prioritising safety through extensive testing. While concerns about the impact on taxi drivers are understandable, these must be balanced against wider societal benefits. Evidence from San Francisco suggests that robo-taxis are replacing private car journeys rather than traditional taxi services.

This raises an important question for Malta. Could a pilot project in Gozo test whether autonomous shared mobility can reduce private car usage and village congestion? If successful, such a scheme could provide valuable evidence for a more sustainable, efficient and environmentally-friendly transport future.

The post Welcome a metaCCAZE testing for autonomous vans first appeared on The Malta Business Weekly.

This shows the government’s commitment to protecting the environment, and especially agricultural land. As I have reiterated over the years, this commitment must be backed by a top-down approach. If we allow laissez-faire decisions without strategic involvement, this will also affect the country’s food security, especially agricultural land, and we will lose our direction as a socialist government. Frankly, I am pro-business as an economist, to the point that it does not impinge on the collective. Truthfully, I am glad that the first Cabinet decision signals the newly-elected government’s commitment to protecting the environment.

Looking back at the PL’s campaign and the manifesto, Int Malta, the well-being index stresses the importance of protection and the quality of the local environment. If we do not protect the environment, we will have a problem with the well-being index. It is the first time in history that a Maltese political party has bound itself to a well-being index distinct from the costings of its electoral manifesto. I am glad to also see the ministers at full speed, following up on cases. I have already received some of the cases they got back to me on, and they are in contact to resolve some of the issues that matter to them, which are also merited and have lingered for years due to excessive bureaucracy.

Having said this, the PL still needs to focus on areas that require particular attention when it comes to the protection of the environment, among others are issues related to some areas and towns I visited as part of the general election campaign in the ninth district. I will have enough time in the coming weeks to talk about them and to write about these matters. Certainly, I had the opportunity to write about them before the general election and during the campaign, and I will not shy away from repeating them. As you all know, I am quite fond of the environment and nature. Being an economist does not mean that one excludes the other. Without a healthy environment, we cannot have a healthy population, a productive workforce, and a healthy economy. If you tell me what you want to continue focusing on in the coming years, the topics that are dear to me are the environment, social, and governance.

Besides the environment, I work on ESG within the Banking and Financial Industry. I am quite happy to keep promoting the topic because we also need an integrated approach among the local government, the banking industry, the EU Multiannual Financial Framework, and the funds to be allocated for infrastructure projects to mitigate physical climate risks. Furthermore, nature and its restoration, as well as the protection of biodiversity, are topics we must not overlook. On the social part, I ran on a socialist party ticket, and no matter how pro-business we are in creating wealth, we must never forget our roots. By no means am I in favour of taking from others to give to others for matters that are not merited. We all need to work hard to achieve a better standard of living.

However, the government must step in to assist where needed, especially when market forces are outpricing our younger generation. This is why the Int Malta manifesto promotes affordable housing. It is another topic that requires immediate attention. I wrote about this last week. This measure will provide a different perspective on loans, especially the 25% interest-free loans. This is the government’s commitment and social side, which will be promoted in the current legislature.

Another topic that requires attention is governance in many decisions taken at the authority level. True, bureaucracy breeds governance. However, excessive bureaucracy is halting government performance. Allowing this excessive bureaucracy is not helping to achieve several national-interest projects. I look forward to seeing the manifesto implemented. Certainly, the competence of the ministers in charge will make this happen. And it will, in the end, result in the good of the collective.

The post The environment must be a top priority first appeared on The Malta Business Weekly.

Fast forward to 2024, for the same period of January to April, Malta received 889,682 tourists with a real average spend per tourist (adjusted for inflation to 2019 level) of €626.33.

In 2025, for the same period, Malta received 1,044,657 tourists with a real average spend per tourist (adjusted for inflation to 2019 level) of €642.99. This means that compared to 2024, real average spend per tourist increased by 2.7% though still below the 2019 levels for the same period.

This year, for the same period of January to April, Malta received 1,215,966 tourists with a real average spend per tourist (adjusted for inflation to 2019 level) of €616.89.

This means that so far, from January to April, while tourist arrivals are 16% higher than for the same period in 2025, the real average spend per tourist is actually 4% lower than the average spend for the same period in 2025 and still obviously below the 2019 level.

This means we are overall moving in the wrong direction. We are increasing tourist arrivals at breakneck speed, but the average real spend per tourist is falling. The Malta Vision 2050 document, published earlier this year, emphasises moving away from volume-driven tourism. In this document, the strategic focus is redirected entirely toward attracting high-value visitors who seek distinctive, upscale cultural, historical, and culinary experiences, aiming to increase the real spend per tourist rather than just stacking up visitor arrivals. However, the numbers so far show that we have moved away from this rather than toward it.

A proper analysis would however need to understand the context. The context is one whereby a lot of our tourist source markets are suffering from inflationary pressures mainly due to rising energy and fuel costs. Thus, it was widely expected that tourists this year would spend less. This is more evident as the actual nominal spend per tourist (not adjusted for inflation) in January to April of this year was lower than January to April 2025 (€756.39 vs €770.30). Some insights as to why this is happening can also be drawn from the composition of inbound tourists, whereby one shift that is most evident is that for the period January to April 2024 tourists from Poland made 9% of all tourists, while this shot to 15% for the period January to April 2026.

At this point, it is very likely that we will get some 4.5 to 4.6 million tourists this year, versus the 4 million we got in 2025.

The data exposes a stark disconnect between policy and reality: while the Malta Vision 2050 calls for a strategic pivot toward high-value, sustainable tourism, so far we remain firmly caught in a high-volume, low-yield trap. Shifting a massive 16% more visitors into the first four months of 2026, only to see real average spend drop by 4%, proves that Malta is running faster just to stand still.  While external inflationary pressures in core European markets and a shifting demographic mix – characterised by the rapid growth of lower-cost markets such as Poland – help explain why consumer spending is tightening, these factors should not be used as excuses to have us move away from the trajectory and targets set in Vision 2050.

Welcoming an unprecedented 1.2 million tourists in just four months at a lower real yield per capita isn’t a victory; it is a strain on infrastructure. With Malta likely to surpass an estimated 4.5 million arrivals by the end of the year, the pressure on the industry to transition from chasing raw totals to enforcing stricter quality baselines becomes larger.

The post Moving in the wrong direction first appeared on The Malta Business Weekly.

For years, Malta’s economic headline numbers have been the envy of Europe, with recent figures showing a robust real GDP expansion of 3.9% in the first quarter of 2026. Yet, beneath these buoyant percentages lies an economic growth model that has reached its physical and social thresholds. Our growth has relied heavily on sheer volume from foreign labour to mass tourism.

The immediate challenge ahead is a profound economic transformation. We must pivot from an economy driven by quantity to one powered by quality, productivity, and competitiveness. The challenge is that this transformation needs to take place whilst ensuring that economic growth remains strong to ensure growing government revenue which is needed to counterbalance the ever growing public expenditure.

True competitiveness means empowering our workforce through digital innovation, upskilling, and supporting high-value niches like biotech, advanced financial services, and the green economy. Crucially, this economic evolution must occur hand-in-hand with improving everyone’s daily quality of life.

While we restructure internally, our external anchor, the European Union, is experiencing an existential crisis. Squeezed between an increasingly volatile, tariff-prone, and unpredictable ally in the United States and an aggressive, heavily subsidised economic competitor in China, Europe finds itself virtually alone on the global stage.

To survive this economic chokehold, Brussels is pushing to evolve rapidly into a tighter federal union. While a unified European front sounds ideal on paper, a “one-size-fits-all” federal Europe could have severe, negative repercussions for a small island nation like Malta.  For decades, Malta’s fiscal autonomy, specifically our competitive corporate tax framework, has been a cornerstone in attracting foreign direct investment (FDI). A federal shift toward harmonised tax rates across the block could dismantle this vital economic lever overnight. In a highly centralised federal union, policy decisions inherently favor the industrial heartlands of mainland Europe. Malta’s unique geographic realities as a disconnected, peripheral island could easily be sidelined. Moreover, stricter EU-wide environmental mandates and transport regulations (like maritime taxation) could fail to account for our total reliance on shipping, unfairly driving up the cost of importing essential goods and exporting our products.

In the last days, whilst the nation was focused on the last days of the election, finance ministers from the EU’s six biggest ‌economies (E6) agreed among themselves to support more centralised capital markets supervision, in a breakthrough crucial for deeper integration of Europe’s fragmented capital markets. The push for financial market players to be supervised at a European Union rather than national level is part of the EU’s ​plan to redirect trillions of its citizens’ savings, now idling in bank deposits, into more productive investment in ​Europe. This means that supervision of significant market infrastructure would be gradually transferred to the European Securities ​and Markets Authority in Paris. The issue of handing over local powers to supervise trading platforms, central counterparties and central securities depositories to the EU has been difficult because of vested national interests and opposition from Ireland and Luxembourg. To get the legislation moving forward, these 6 EU member states need to find the support of nine other countries. In this case, the law can only advance if it secures the backing of at least 15 countries representing 65% of the EU’s population.

Compounding the pressure from Brussels is a deeply volatile international scenario that guarantees constant, unexpected shocks, which could result in persistently high interest rates due to global inflationary pressures. Such inflationary pressures are likely to trigger shifts in consumer behaviour across Europe. This would mean that tourists could become more budget-conscious and staying for shorter periods.

To say that the newly elected government has its hands full would be an understatement. Navigating a changing EU, transforming our domestic economic engine, and shielding our shores from global financial headwinds is no easy task. However, the administration will also need to handle all these challenges while also facing the reality of the costly electoral promises made during the heat of the campaign, from tax cuts to increased handouts.

Balancing fiscal discipline and bankrolling all campaign pledges while steering Malta through all the outlined challenges will be a tall order. It is time to look ahead, adapt swiftly, and ensure our nation manages to withstand these challenges effectively.

The post Beyond the ballot box first appeared on The Malta Business Weekly.

However, the PL must take note of the result and analyse what happened. It is only normal that a party in government for so many years starts losing its majority. One of the PL’s biggest mistakes in government was the performance of certain authorities and the public sector. Besides, some of the injustices perpetuated by the PN administration – which were promised to be addressed prior to PM Robert Abela’s leadership – were never addressed or only partially addressed, creating another injustice.

Another topic that is resurfacing is affordable housing, an area I have been writing about and discussing in recent years. The problem of rent, as well as housing prices, has become a sore point for many. We need to revise rent subsidies and accelerate the process of building as many affordable housing units as possible. The PL campaigned on a manifesto that introduced several measures to address affordable housing, including a 25% interest‑free loan.

Now, the PL in government must accelerate the implementation of the manifesto in its entirety. We must avoid past mistakes. The imperative here is to address the problem of those creating obstacles with requests for transfers, as well as to ensure that those halting any processes for government projects are removed from any position of power. Another issue that came up during this campaign is the problem of foreigners working in Malta. We must understand that some menial jobs must be executed by them; otherwise, we would have a problem. What the Maltese are not tolerating is the preference given to foreign workers over many locals. We do have a problem here, as this was another issue I noticed when meeting people.

Likewise, the traffic problem must be given priority. It’s not that we will eliminate traffic, but we can do better with the management of our road infrastructure, as well as with the work‑from‑home policy, morning appointments, and university and MCAST lectures. The PL did a lot of good and improved the lives of many, including pensioners. However, we must address those pockets that are not feeling the success of economic growth.

What PM Abela must do is surround himself with technical people, including political economists. Having an economist in politics is quite rare, and this is important. Policies must not be designed by regulators, but by economists who can understand the electorate’s concerns. Let’s be honest with ourselves: we could have done better in implementing national projects, including the upgrade of road infrastructure. However, there were other priorities, including cushioning the impact of the Ukrainian war and the ensuing energy shocks, which compounded into inflation that people could not cope with. Likewise, the problem of the Iranian war and the instability it created in the Middle East.

The PL must ensure the acceleration of projects of national importance and, as soon as possible, implement the policies outlined in the manifesto pertaining to social and affordable housing, as well as the SME Boost tax cuts. There are many other proposals in the manifesto which I want to see executed as soon as possible. However, the top priorities are affordable housing and the SME Boost tax cuts. SMEs need additional liquidity, just like our younger generation, as well as singles, separated, or divorced individuals, who need security when purchasing a dwelling.

The Maltese housing market changed, and so did the composition of our demography. What did not change is the way we tackle the problems created by economic success. We did not keep pace with the acceleration of economic growth. And this is why the electorate sent a message to the PL, even though the roughly 22,000 votes helped secure a strong mandate to implement the projects and the Int Malta manifesto.

Lastly, I wish I could contribute more to the country and to the PL. However, it is now up to the by‑election, which is expected to open in the coming days. Good luck to all those contesting.

The post Moving forward first appeared on The Malta Business Weekly.

In the mid-1970s, fears of mass unemployment were real, with predictions reaching up to 25% in some scenarios. Given the island’s small size, limited natural resources, and lack of economic diversification, a strong push for job creation became sine qua non. This began with export-oriented manufacturing in textiles, electronics, tobacco products and footwear. The state played a major role through nationalisations, public works, harbour investments and Freeport infrastructure, while private-sector investment also proved essential.

Services eventually became the dominant sector, including financial services, iGaming, aviation, information technology, professional services and tuna ranching for export. Tourism, leveraging Malta’s Mediterranean climate and rich heritage, has over the past sixty-five years contributed significantly to economic growth, attracting more than four million visitors annually.

The fly in the ointment is modern AI technology.

AI can eliminate certain jobs, but it also raises productivity, increases incomes for other groups and stimulates new demand. That demand creates new industries, occupations and employment opportunities. Foreign workers now account for approximately 28–30% of the workforce. By 2024–25, more than 135,000 foreign workers, many in low-wage and unskilled occupations, were on payrolls, with thousands of work permits issued annually through licensed private employment agencies.

On a positive note, Malta has experienced technological disruption since the early 1980s that has created entirely new job categories. Yet, with the advent of increasingly dominant AI technologies, surveys suggest that nearly one in five American workers believe AI or automation is likely to replace them.

It is not only ordinary workers who are concerned. Dario Amodei of Anthropic has warned that AI could push unemployment rates to between 10% and 20%. Bill Gates, co-founder of Microsoft, has stated that in an AI-driven world people will not be needed for “most things”. Sam Altman of OpenAI, while increasingly emphasising AI as a tool to augment rather than replace people, still acknowledges the likelihood of disruption and significant job transitions.

Economists, however, are far less pessimistic. They are generally sceptical of the “lump of labour fallacy”, which assumes that the labour market is static and that jobs lost to technology are permanently lost. This remains one of the central ideas underpinning technological change and creative destruction in economics. The theory suggests that total employment can recover over time, although not everyone benefits equally.

Technological change reallocates labour rather than eliminating it. While automation displaces workers in certain occupations, it simultaneously raises productivity and incomes elsewhere. Through wider economic adjustments, employment can potentially be redistributed across the economy.

A typical example from the mid-1970s was the emergence of CMT (Cut, Make and Trim) textile factories. These employed thousands of unskilled women operating sewing machines to manufacture garments for export to Europe. More recently, the introduction of gaming companies attracted a rapidly expanding cluster of businesses and vacancies that today offer highly competitive salaries.

The digital revolution also reduced traditional clerical jobs in the private sector, although many workers found employment in the public sector, which today employs approximately 56,180 people. The aviation sector represents another success story. More recently, Malta established the MDIA, a public-sector agency specialising in emerging fields such as artificial intelligence, blockchain technology and cryptocurrencies.

The argument that AI will disrupt employment prospects by 2035 is theoretically valid. However, this does not mean that every displaced worker will easily find alternative employment, nor that the transition will be painless. Some redundancies could potentially be absorbed through compressed working-week arrangements. Furthermore, particularly in a small island state, not all new jobs are equal in terms of pay, security or quality.

Malta has weathered numerous business cycles, yet experience teaches us that technological change tends to reallocate labour rather than eliminate it. While automation displaces workers in some occupations, it can also create opportunities elsewhere. The closure of the drydocks, which at their peak employed around 13,000 highly trained technical workers, remains a reminder of the social costs that can accompany structural change. Yet during almost a century of naval and maritime operations, productivity gains also translated into higher incomes for dock workers, who were nostalgically referred to as the “aristocracy of the proletariat”.

In conclusion, the past decade has witnessed not only job restructuring but also growing social pressures. These include housing affordability challenges, pollution from internal combustion engine vehicles, infrastructure strain, marine pollution, weak social integration of third-country nationals, daily traffic congestion, summer blackouts and a spiralling cost of living, partly mitigated through state subsidies.

Against the backdrop of recent conflicts in Ukraine, the Middle East and tensions involving Iran, these disruptions contribute to an atmosphere of growing uncertainty. The recently elected Labour government has promised policies aimed at easing these pressures, including annual bonuses to help households cope with rising living costs, lower personal taxation, improved pensions, the proposed construction of a light rail system, additional green spaces for families and measures intended to address Malta’s persistently low fertility rate.

George M Mangion is a Senior Partner at PKF Malta

The post Floating in mid-air on an AI trajectory of disruption first appeared on The Malta Business Weekly.

For example, during my teenage years, I befriended someone from San Ġwann and became familiar with much of the Mensija area. I continue to spend Saturday mornings in San Ġwann, where I have established relationships with several residents while running errands. Swieqi is another locality where I have spent considerable time with close friends, fostering an attachment to the area. Għarghur, where Ray’s maternal family originates, holds particular significance for me, evoking memories of Auntie Vitor and Ray’s mother, Żarena. Choosing another district proved challenging, as I felt it would be unfair to run in a district alongside colleagues I had recently supported. So, it was natural to choose the ninth district.

After more than three weeks of campaigning, I have observed that the second and ninth districts require distinct policy approaches. The second district faces urgent social housing challenges, particularly regarding the timely completion of units in Hanover (Bormla). Over the past four years, I have advocated for the prompt delivery of these units. The PL’s manifesto addresses affordable housing within the current economic context, an issue I am deeply committed to and have consistently campaigned for. As someone hailing from the second district, I am acutely aware of the community’s needs. Many residents seek little more than secure shelter and the opportunity to improve their lives. Some face insufficient income to maintain a decent standard of living or are excluded from qualifying for social housing. I recognise that social housing should not be a permanent entitlement. Individuals who experience improved circumstances should be provided with a transition period and, if appropriate, transition to affordable housing options. Addressing these issues is essential in the short- to medium-term.

Conversely, the ninth district requires targeted economic and environmental policies. In Swieqi, for example, residents struggle to open their windows during summer due to bitumen production coming from distant but yet close zones, which negatively affects their air quality, and the quality of life. I have engaged with residents who contacted me through social media and email, and I fully support their concerns. It is imperative that authorities intervene to ensure collective interests are protected over private gains. This is not a topic I am speaking about now. I have been advocating for better environmental management, and social matters for more than four years.

In Swatar, the community awaits a decision on a significant development project originating from the 2006 rationalisation under a PN government. The transformation of ODZ land in this valley raises concerns, particularly regarding the inclusion of a sufficient green buffer space. While private land development is understood, proportionality must guide such decisions to safeguard residents’ quality of life. On the other hand, in Pietà, increased traffic and problematic traffic lights in Msida and other areas exacerbate congestion. It is essential that residents are consulted before implementing pedestrian projects. This is what I believe, and compromises must be the norm not the exception.

Certainly, additional issues remain to be addressed, and time constraints prevented me from covering every locality in detail. I have valued the opportunity to engage with residents and learn about the realities of both districts. I respectfully request your support and assure you of my continued commitment to residents, regardless of the outcome. Observing how both districts evolve in the coming months will be insightful, particularly if the PL is re-elected. While some individuals express disappointment with certain candidates, ministers, or parliamentary secretaries, I encourage you not to abstain from voting. Instead, consider supporting new candidates on the PL’s ticket to effect change. Abstaining may inadvertently enable those who have disappointed you to be re-elected. Therefore, I urge you to participate in the election and make an informed choice. Furthermore, it is important to acknowledge the PL’s contributions to economic growth, social support, and national stability over the past few years.

Finally, I think Dr Robert Abela deserves another chance. His leadership contributed to continued stability. And frankly, Dr Abela has had to govern under exceptionally challenging circumstances, from shifting geopolitical realities and a global pandemic to yet another energy crisis stemming from the Middle East. Surely, we need to choose between stability and the unknown. And people stand to lose what they have achieved in the past years. The PL in government delivered most of its promises and improved people’s lives. Risking everything for an unknown recipe is not the best option. Hence, choose wisely.

The post Examining some of the realities of the second and ninth districts first appeared on The Malta Business Weekly.