In 2019, Malta’s gross domestic product (GDP) reached €12.2 billion, exhibiting a 4.4% growth from previous year (€11.6 billion).
Malta’s GDP performed well in 2019, mainly driven by a substantial rise in gross value added in the services sector coupled with strong investment growth.
The volume index of production in the broad construction sector witnessed an increment of 44.9% over the 2015-2019 period.
At the same time, the total turnover of the Maltese broad construction sector in 2017 stood at €1.8 billion, representing a growth of 81.2% as compared to 2011. Further, the turnover of the broad construction sector increased to €2.2 billion in 2018, exhibiting a growth of 121.9% from 2011. This was partly driven by an 138.4% increase in turnover in the manufacturing sub sector over the 2010 2018 period.
With regards to the housing market, the Housing Authority Renting to Help Out (Nikru biex nassistu) scheme, which is aimed at encouraging private owners of vacant and finished residential property to offer a lease agreement, has granted homes to 330 Maltese families so far. In its budget, the Maltese government also announced the extension of the newly introduced Affordable Housing Benefit Scheme, driven by its success. The scheme aims to support people with a low income belonging to the category “at-risk-of-poverty rate”. The indicator stood at 16.9 in 2020 and is expected to decline by 0.2 pp Year-on-Year (Y-o-Y).
With regards to the civil engineering market, the Maltese government is actively involved in upgrading the country’s infrastructure. It is aiming to include investment in roads as part of potential investment under the Cohesion Policy for the 2020‑2021 programming period. To address traffic congestion, the government has invested EUR 700.0 million in a seven-year road transport infrastructure project to upgrade and refurbish the road network, starting in 2019.
In its updated Stability Programme 2021‑2024 report, Malta announced its plans to continue to invest in the country’s infrastructure to meet both, current and future economic, social and environmental challenges. Examples of these initiatives include the continuation of arterial road construction projects, roads in residential and rural areas, the regeneration of ports and improvement of facilities for the maritime sector, industrial infrastructure, the modernisation of health facilities, investment in education institutions and social housing.
Under the Recovery and Resilience Facility (RRF) Malta has been allotted EUR 316.4 million in grants.
Malta will invest 54.0% of the plan’s total allocation in reforms and investments to support climate objectives. The country’s key measures to secure its green transition include energy-efficiency renovations and the greening of private and public buildings, with an allocation of EUR 60.0 million for deep retrofitting and renewable energy installations. Moreover, around EUR 16.0 million has been allocated for shifting transport from road to sea and reducing emissions from the transport sector. In this regard, the country has planned to provide access to free public transport to selected groups of the population to address congestion and make transport more sustainable. Given its significant environmental impact as well as its ability to revive the overall economic recovery process, the Maltese construction sector could benefit from the unprecedented investments of the country’s RRP.
Presently, there are two main issues hampering the development of the Maltese construction sector. Firstly, the construction sector is hindered by the shortage of skilled workers. This is partly explained by the high proportion of low‑skilled adults and ageing population. To cope with this issue, the Maltese construction sector tends to rely on foreign workers to fill labour shortages.
Secondly, the persisting issue of late payments has had an unfavourable impact on the construction sector. This issue has been further exacerbated by the global COVID‑19 pandemic. With respect to the construction sector, around 45.0% of enterprises reported that customers are opting for a longer payment cycle, which negatively impacted their cash flows during the COVID-19 crisis.
Overall, the Maltese construction sector has a positive outlook in the medium and long term. Public sector infrastructure and transport system upgrades, supported by EU funding, are expected to dominate the broad sector growth.