Structural changes in the Maltese economy

Abstract

Since the Great Recession, Malta has registered a more favourable economic performance than most other euro area states. It is difficult to reconcile this track record with the island’s strong dependence on foreign trade. This article will argue that the enhanced performance of the Maltese economy could partly be explained by the pronounced structural changes that characterised it in the years preceding the crisis. This restructuring underpins a number of strong trends observed during recent years, such as the rise in labour participation, the improvement in the current account balance and the strong increase in unit labour costs. This is the first study for Malta since 2004 to utilise macroeconomic data going back further than 1995.