This weekend marks 50 years of independence for Malta. As Malta stepped on to the World stage as an independent country again, after over 150 years of foreign rule, the odds were very clearly stacked against Malta’s success. The Prime Minister at the time, Dr George Borg Olivier, received the constitutional instruments from Prince Philip and waved them in his hand for the public to see.

The ceremony of this moment masked the political uncertainty leading up to it, with the opposition leader, Dom Mintoff, having chosen to “lead from the streets” with his opposition to the agreement. It also masked the stark realities facing the Maltese economy.

Malta’s economy was small and highly concentrated on the dockyards. With a population of only 300,000 it had limited human resources, to support the economy. With regards to the dockyards they, in turn, were reliant on the work generated from servicing the dwindling imperial British navy. It was in order to fund the rebalancing of the Maltese economy, post-independence, that £50 million was negotiated from the UK treasury for investment in Malta’s new economy.

Measured in “Constant 2005 US$” Maltese GDP in 1970 (the earliest figure readily available) was around €3000, while it is now in the region of €16,000. (Using “Constant 2005 US$” revalues the nominal US$ value dollar values before or after 2005, using historical rates of inflation or deflation, to the values they would have been in 2005, making it more meaningful to compare values through time). Measured, instead, in current US dollars GDP, per capita, has gone from $828 up to $19,695.

If independence was Malta’s first significant economic event then EU accession brought Malta’s second. Malta’s participation in the EU’s single markets, in 2004, brought the nation not only the threat of increased domestic competition, from foreign imports, but also the opportunity of expanded business opportunities in Europe. Even as the economy thrived, Malta was punching above its weight in foreign affairs as well, hosting the 1989 Bush Gorbachev summit.

Certainly there have been hiccoughs along the way. The global financial crisis, which precipitated the subsequent Euro crisis, certainly made economic waves that crashed on Malta’s shores, but these broke against the solidness of the fundamentals of the Maltese economy. Funded by local deposits, as opposed to through fickle money market funding, local banks were not faced with an exodus of capital in the bleak days of the economic crisis in 2008. This meant that the local economy suffered less than other EU economies, and recovered more quickly.

In the years since 1964 Malta has internationalised its economy in terms of both its import and exports markets. These days its major sources of imports are Italy (25%), Germany (6%), UK (5%), Russia (5%), and France (5%). The major destinations for Maltese exports are Germany (9%), Singapore (7%), Libya (6%), France (6%), and the US (4%).  The manufacturing sector alone has around 250 foreign-owned firms exporting from the Islands. Farming and the dockyards have been replaced by high value added manufacturing such as (electronics and pharmaceuticals) the IT industry (including the online gaming sector), and financial services.

The modern Maltese economy is experiencing among the EU’s highest levels of GDP growth, with low levels of unemployment. The nation’s budget deficit is less than 3% and, while at 73% its overall level of government debt, as a percentage of GDP, is elevated above the EU’s target of 60% it is still beneath the EU average of 88.9%.

All of this is not to say that there is no work to do. Certainly Malta slipping 47 places in the World Economic Forum’s global competitiveness rankings should give some pause for thought, and recent reductions in industrial output are a matter of concern. However, Malta’s strength is born of its small size.

Being a small economy makes it more dynamic. Changes in policy or strategy can be implemented across the island with a rapidity not matched by larger economies. And exciting new markets exist for Malta which are still to be fully exploited. Within the financial services industry Malta is looking to establish itself as a new domicile for the environmental insurance sector. This is a market set to become even more significant with international agreement currently being sought to find ways to pay for the costs of environmental change. Similarly, logistics is another sector of the economy with huge potential, which could exploit Malta’s central location in the Mediterranean as a hub for international trade.

In September of 1964 Malta made the bold decision to take control of its own future, and despite all the potential pitfalls, Malta has thrived to become a dynamic modern European economy. While we may hope otherwise, it is unlikely that the next half century will be any less eventful than the last.  Yet in the certainty of knowing that Malta will continue to show the same tenacity of spirit, and application of effort over the next 50 years, as it has in the last 50 years, then the people of these islands can look forward to even more success to come.