Malta’s geographical location is considered to be an ideal gateway to the European and North African markets and has allowed the islands to develop as an important trading post. Its location is further strengthened by an excellent communications infrastructure, a flexible and multi-lingual workforce and efficient air and sea connections.

National statistics indicate that over the past few years, local economic growth has hovered between 1.0 and 2.0 per cent. Subsequent to registering a 1.0 per cent increase in 2002, Malta’s Gross Domestic Product dropped by 1.9 per cent in 2003 and grew again by 1.0 per cent in 2004. These rates of growth were comparable with those recorded at the European level. In 2004, private household consumption expenditure grew by 0.8 per cent over the previous year.

In terms of performance, the exports of goods and services recovered after dipping in 2001 and 2003. In the course of 2004, exports of goods and services surged by 3.2 per cent over the previous year to EUR 3637.9 million. Imports of goods and services experienced positive growth rates during 2003 and 2004. This increase in imports served to offset the positive impact of the increase in exports on GDP growth during the same period. The fall in import prices during 2004 served to further stimulate the growth in imports of goods and services in real terms.

During 2004, total sales by the large manufacturing enterprises reached EUR 2335.9 million. At EUR 1837.0 million, manufacturing export sales were marginally above the previous year’s level, whereas manufacturing local sales reached EUR 499.1 million, a drop of almost EUR 29.9 million over the previous year. During 2004, average sales of manufactured goods per employee increased by 0.9 per cent over the previous year; an increase that would have been higher were it not for the recorded drop in export prices. Export-led manufacturing enterprises exported substantially more in volume terms than in the previous year. The drop in export prices resulted from the intense international competition in the export markets for manufactured goods. In 2004, manufacturing investment increased by 3.1 per cent over the previous year.

The tourism sector registered growth during 2004, following a decline in 2002 and 2003. Further improvements in the performance of the tourism sector are being recorded during 2005. After increasing by 3.5 per cent during 2004, the number of tourists to Malta has already gone up by 2.1 per cent in the first five months of 2005 when compared to the same period in 2004. The cruise passenger market is increasingly gaining in importance as a component of Malta’s tourist industry.

In the course of 2004, the employment situation improved when compared to the previous year. The number of gainfully occupied persons increased by more than 1,000, or 0.7 per cent. As a result, between December 2003 and the following year, unemployment declined by one percentage point, to 6.9 per cent. At the same time, the long-term unemployment rate declined to 2.9 from 3.9 per cent in the previous year. The majority of workers, or 20 per cent, works in the manufacturing sector. It is estimated that 134,653 persons are employed on a full-time basis, whereas a further 12,342 persons work on a part-time basis.
As an EU member state, Malta joined the ERM II mechanism on 2nd May 2005, and adopted the Euro on 1st January 2008.