2016 Index of Economic Freedom

Malta

overall score66.7
world rank55
Rule of Law

Property Rights70.0

Freedom From Corruption55.0

Limited Government

Government Spending46.5

Fiscal Freedom63.9

Regulatory Efficiency

Business Freedom61.6

Labor Freedom53.5

Monetary Freedom83.5

Open Markets

Trade Freedom88.0

Investment Freedom85.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 0.4 million
  • GDP (PPP):
    • $14.1 billion
    • 3.6% growth
    • 2.9% 5-year compound annual growth
    • $33,216 per capita
  • Unemployment:
    • 5.9%
  • Inflation (CPI):
    • 0.8%
  • FDI Inflow:
    • $9.3 billion
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Malta’s economy benefits from a relatively high degree of openness to global trade and investment. The government has taken steps to enhance the competitiveness and soundness of a financial sector that is now about eight times the size of the economy. The banking sector has weathered the European sovereign debt turmoil relatively well with no need for capital injections.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 66.7 (up 0.2 point)
  • Economic Freedom Status: Moderately Free
  • Global Ranking: 55th
  • Regional Ranking: 24th in Europe
  • Notable Successes: Open Markets and Monetary Freedom
  • Concerns: Corruption and Management of Public Finance
  • Overall Score Change Since 2012: –0.3

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Background

Malta joined the European Union in 2004 and the eurozone in 2008. Labour Party leader Joseph Muscat won the March 2013 elections and became prime minister. With few natural resources, Malta imports most of its food and fresh water and 100 percent of its energy. The economy depends on tourism, trade, and manufacturing. Well-trained workers, low labor costs, and membership in the EU attract foreign investment, but the government maintains a sprawling socialist bureaucracy, with the majority of spending allocated to housing, education, and health care. Unemployment is relatively low. Substantial migration from North Africa and instability in the region are of increasing concern to the government.

Rule of LawView Methodology

Property Rights 70.0 Create a Graph using this measurement

Freedom From Corruption 55.0 Create a Graph using this measurement

New allegations continue to surface in ongoing multiple investigations into bribery, misappropriation, tax evasion, and abuse of office by the former head of Enemalta, Malta’s state energy provider. Malta’s judiciary is independent both constitutionally and in practice. Property rights are protected, and expropriation is unlikely. Foreigners do not have full rights to buy property in Malta.

Limited GovernmentView Methodology

The top individual income and corporate tax rates are 35 percent. Other taxes include a value-added tax and a capital gains tax. The overall tax burden equals 34 percent of total domestic income. Despite some reduction in spending, government spending remains high and amounts to 42.2 percent of total domestic output. Public debt, at about 70 percent of GDP, is in potentially dangerous territory.

Regulatory EfficiencyView Methodology

The overall regulatory framework remains burdensome despite reform efforts. Starting a business takes 40 days on average, and completing licensing requirements is time-consuming. The labor market remains relatively rigid. The government mandates a minimum wage, and labor relations can be confrontational. The government passed the Fiscal Responsibility Act in 2014 and is restructuring various subsidized, state-owned enterprises.

Open MarketsView Methodology

EU members have a 1 percent average tariff rate. Trade agreements are currently being negotiated with countries that include the United States and Japan. The government may not expropriate property without providing compensation. The financial sector has undergone gradual restructuring and expansion, and the banking sector has become more open to foreign banks.

Country's Score Over Time

Bar Graph of Malta Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Malta to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Switzerland810.5
2Ireland77.30.7
3Estonia77.20.4
4United Kingdom76.40.6
5Denmark75.3-1.0
6Lithuania75.20.5
7The Netherlands74.60.9
8Germany74.40.6
9Luxembourg73.90.7
10Iceland73.31.3
11Czech Republic73.20.7
12Georgia72.6-0.4
13Finland72.6-0.8
14Sweden72-0.7
15Austria71.70.5
16Norway70.8-1.0
17Latvia70.40.7
18Poland69.30.7
19Cyprus68.70.8
20Spain68.50.9
21Belgium68.4-0.4
22Macedonia67.50.4
23Armenia67-0.1
24Malta66.70.2
25Slovakia66.6-0.6
26Hungary 66-0.8
27Albania65.90.2
28Bulgaria65.9-0.9
29Romania65.6-1.0
30Portugal65.1-0.2
31Montenegro64.90.2
32France62.3-0.2
33Serbia 62.12.1
34Turkey62.1-1.1
35Kosovo61.4N/A
36Italy61.2-0.5
37Slovenia60.60.3
38Croatia59.1-2.4
39Bosnia and Herzegovina58.6-0.4
40Moldova57.4-0.1
41Greece53.2-0.8
42Russia50.6-1.5
43Belarus48.8-1.0
44Ukraine46.8-0.1
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