Cost pressures major concern for Gozo businesses, survey finds

The Gozo Regional Development Authority, and the Gozo Business Chamber have published the results of the fifth Gozo Business Sentiment (GBS) survey which was conducted in March 2026, jointly between the two entities.

The scope of the GBS is to gain deeper insights into sectoral developments and emerging trends, through semi-annual surveys. This business dialogue effort aims to foster regular communication with businesses operating in Gozo, gathering timely data on recent performance, business activity expectations, investment and employment trends, and pricing dynamics. By doing so, the GBS complements official economic indicators, which are often available only with a time lag.

Additionally, businesses are encouraged to share perspectives on sector-specific developments and current economic issues, providing qualitative feedback that allows both the Authority and the Chamber to understand the underlying drivers of present and future economic trends.

The sampling methodology remains the same over each period, together with the sampling stratification which reflects the economic composition of the Gozitan economy.

The key findings of the survey are outlined below.

Business conditions and expectations

Gozitan enterprises continued to record stable business conditions, with 58% of the participants stating that their situation remained unchanged in the preceding six months.

Businesses reporting worsening in conditions were also lower than those recorded a year earlier, standing at 9% from 16%.

The net balance points to an improvement in sentiment, standing at 25%, which remains well above the 11% average recorded across all survey rounds, but five percentage points less than the all-time high of 30%, which was recorded in the previous survey round.

The secondary sector, consisting of manufacturing and construction enterprises, registered the largest share of improved business conditions, with a net balance of 38%.

The services sector also recorded a strong positive net balance, standing at 24%. Within this sector, accommodation and food service activities emerged as the category with the strongest positive sentiment, followed by the information and communication activities.

For the first time since the September 2023 survey round, cost pressures have emerged as the most pressing challenge for local firms, surpassing concerns related to staff shortages.

In the latest survey, 49% of participants reported cost pressures, an increase of nine percentage points when compared to that reported in the previous survey round. This was particularly evident within the transport and storage activities, followed by accommodation and food service activities, and construction.

Nonetheless, this survey round must be put within the context that it is the first to capture the potential implications of higher international energy and transportation prices driven by the escalated conflict in the Middle East. Although energy prices in Malta remain subsidised, higher global energy costs still feed through as they impact the prices of imported inputs.

The lack of suitable employees to support operations remains a very pressing challenge, with 48% of respondents flagging it. However, this represents a slight drop when compared with the September 2025 survey.

A slowdown in sales was cited by only 14% of respondents, an all-time low, although broadly in line with other March surveys.

Despite the global conditions, 48% of participants anticipate an improvement while only 10% foresee a deterioration in conditions. The remaining respondents (43%) expect conditions to remain unchanged. This results in the highest net balance recorded across all survey rounds, standing at 38%.

The strongest net balance, that of 44% was recorded in the knowledge sector, primarily made up of arts, entertainment and recreation category.

Prices

Cost pressures are also reflected in businesses’ price expectations, with 76% of respondents anticipating higher input prices over the coming six months.

This marks an increase over both the September 2025 round and the previous year, with industry, excluding construction, and transportation and storage activities reporting the strongest expectations of rising costs.

Despite expectations of higher input costs, these pressures are not yet being fully reflected in selling prices. Most respondents, 68%, expect selling prices to remain unchanged over the coming six months, while 33% anticipate an increase, a share broadly in line with previous survey rounds.

Employment

The vast majority of the businesses (63%) consider increasing their workforce in the short-term, whereas 38% of the sample indicated that they are not seeking additional employees.

The positive employment intentions were evident across all economic sectors.

Among the skills required one could notice strong demand for technical and operational competences.

Investment

64% of firms expect to make an investment in the coming six months, slightly exceeding the result of the September 2025 survey, with enterprises in the transportation and storage sector showing the strongest investment outlook.

A focus on external financing

The supplementary focus of the March 2026 survey was on external financing, with particular attention given to businesses’ access to suitable bank lending facilities.

64% of the respondents do currently have an external source of financing. Among these, bank loans and credit facilities represent the most common form of funding, accounting for 57% of the sample. A smaller proportion of businesses make use of bank loans or credit facilities supported by government or development bank schemes, which account for 7% of the sample.

30% of the surveyed firms stated that they do not have an outstanding external financing.

When asked about the ease of accessing external financing, the largest share (38%) highlighted that they lack sufficient information to provide an assessment, with 36% highlighting that this was an easy process, followed by 26% who highlighted that this was a relatively difficult process.

Among those who did identify challenges, the most common concern was the administrative or documentation burden associated with the process. Other factors mentioned included lack of information or guidance, as well as the cost of financing.