Malta’s economy has continued to outperform the rest of Europe, recording the fastest growth rate in the European Union during the first half of 2025.

Delivering his Budget speech in Parliament, Finance Minister Clyde Caruana said Malta’s Gross Domestic Product rose by 3.1 per cent in real terms, more than double the EU average. Growth was driven largely by domestic demand and service exports, particularly in the digital and information sectors, which grew by 7.4 and 10.3 per cent respectively.

Tourism also played a major role in Malta’s recovery, with 2.2 million visitors arriving in the first seven months of the year — a rise of almost 13 per cent — and total spending up by 19 per cent.

Economic forecasts point to continued momentum, with growth expected to reach 4.1 per cent in 2025, maintaining a steady pace the following year. Inflation is projected to stabilise at around 2.2 per cent, while the Cost-of-Living Adjustment for next year will amount to €4.66 per week.

Alongside the COLA, the government will again issue the additional cost-of-living payment that was first introduced in late 2022 during the pandemic. Around 85,000 families benefited from this supplement last year, receiving a total of about €100 million between them.

Caruana said the government will continue supporting families and businesses while keeping finances under control. The deficit, which stood at 8.7 per cent during the pandemic, has been reduced to 3.3 per cent of GDP this year, and is expected to fall further to 2.8 per cent in 2025, in line with EU targets.

Public debt remains below the 50 per cent mark and is projected at 47.1 per cent of GDP by the end of this year, one of the lowest levels in the bloc.

While global and European growth remain subdued amid geopolitical tensions and reduced public spending elsewhere, Malta’s government says its fiscal discipline has created space to continue investing without cutting expenditure.

The International Monetary Fund forecasts global growth of 2.8 per cent next year, while the EU is expected to expand by less than half that rate.

Caruana said Malta’s “strong fundamentals” and prudent management allowed the country to remain resilient through recent crises, pledging that the 2025 Budget will “continue to protect families, sustain businesses, and strengthen the economy for future generations.”