GDP grew by 3.9% in first three months of 2026

Malta’s economy grew by 3.9% in the first quarter of 2026, down from a 6.5% growth rate when compared to the previous year.

The figure comes as the Central Bank of Malta released its third Quarterly Review for 2026, stating that the national economy maintained a robust pace of expansion during the first three months of the year. 

Although real Gross Domestic Product (GDP) growth was lower when compared to the previous quarter, it continued to outperform the average for the euro area. The sustained growth was primarily propelled by domestic demand.

The central bank explained that services remained the main driver of economic growth, adding 3.2% to real GDP growth. This was mainly prompted by “the sector consisting of wholesale and retail trade, repair of motor vehicles and motorcycles, transportation and storage and services related to accommodation and food service activities.”

The residential property market showed no signs of slowing down, with prices increasing at an annual rate of 6.7%, due to tourism demand and migrant worker demand. In the rental market, advertised prices rose by between 4.9% and 5.3% during the quarter under review.

When it comes to government consumption, this surged by 8.5% due to higher outlays in health and residential care sectors, while private consumption expenditure rose by 3.7%.

When it comes to prices, annual inflation as measured by the Harmonised Index of Consumer Prices (HICP) slowed to 2.3% in March 2026. However, underlying inflation, which excludes energy and food costs, rose slightly to 2.4%, which now stands above the euro area average. 

Malta's labor market continues to exhibit high levels of “tightness,” characterised by job vacancies that reached historically high levels of 10,022 in the first quarter of 2026.

Total employment increased by 3.3% in annual terms, driven largely by full-time roles in the arts, entertainment, and accommodation sectors. Despite the increase in employment, average actual weekly hours worked saw a slight decrease to 35%.

In the first quarter of 2026, the general government of Malta recorded a deficit of €339.0 million, representing a significant widening from the €85.3 million deficit registered in the same period of 2025. This increase was primarily driven by a 14.5% surge in total government expenditure, which reached €2,341.3 million.

The primary deficit for the quarter stood at €262.0 million, which was €249.1 million higher than the figure from a year earlier.

The general government deficit-to-GDP ratio rose to 3.2% in the first quarter of 2026, up from 2.2% at the end of 2025.