A few days ago, the National Statistics Office issued the population figure for 2023. As can be seen below this is the fifth consecutive year (excluding the pandemic years of 2020 & 2021) whereby we have been increasing Malta’s resident population by 15k or more, per year.
Through a rather simple simulation shown below I wanted to show the importance going forward of growing Malta’s economy through an increase in productivity. As shown below if we had to divide Malta’s Gross Value Added for 2022 and 2023 by the registered resident population, the end result would be that productivity increased by just 1.2%. This meant that at such a low productivity increase level, we needed to increase the resident population by 21k persons in 2023 to achieve the 5.2% real increase in GVA. Had productivity increased by 4%, the amount of persons that should have been added to the resident population in 2023, would have dropped to just over 6k.
Yet what I see around me is a country which seems unable to get down from the high-speed train that it is riding on.
In my professional capacity I meet business owners all the time. I have still to meet a successful business owner, who is not involved in some real estate side project. By and large every business owner in Malta is keen on using business profits and having them invested in some construction project. A cursory look at the approved dwelling units by the Planning Authority shows a baseline of 7k approved dwelling units per year, from 2016 onwards and increasing again in 2022 (almost 10k approved dwelling units). This is when many businesses are craving for proper investment in digital technologies that could really help increase productivity levels. However, as we all know, capital will aways chase quick profits and which is why so much capital is being shifted towards construction. Ultimately this means that we are on a never-ending loop. As we keep ignoring the need to boost productivity and keep growing our economy by the sheer number of people involved in it, this will in turn require more construction projects to house the increasing resident population.
However, all this comes at a price. We are all seeing that Malta’s infrastructure is bursting at the seams, be it health services, drainage or traffic. Ultimately, policymakers will need to reign in the annual influx of workers or else face a complete collapse of Malta’s infrastructure system and national health service and that would mean that businesses cannot address internal inefficiencies by throwing people at the problem.