Business sentiment in Gozo remained resilient during the first quarter of 2026, with firms reporting stable operating conditions and increasingly optimistic expectations for the months ahead, according to the latest Gozo Business Sentiment Survey published jointly by the Gozo Regional Development Authority and the Gozo Business Chamber.

The March 2026 survey, the fifth edition of the semi-annual exercise, gathered feedback from businesses across a range of economic sectors to assess recent performance, future expectations, investment plans, employment trends and pricing dynamics.

The findings indicate that a majority of Gozitan businesses continue to operate under stable conditions. Some 58% of respondents reported no change in business performance over the previous six months, while only 9% said conditions had worsened, down significantly from 16% recorded a year earlier.

The survey's net balance of positive sentiment stood at 25%, remaining well above the average recorded across all survey rounds, although slightly below the record 30% registered in September 2025.

Manufacturing and construction firms led the improvement in sentiment, recording the strongest positive balance at 38%. Service-oriented businesses also reported favourable conditions, particularly those operating in accommodation and food services, followed by information and communication activities.

For the first time since September 2023, rising costs have overtaken labour shortages as the primary concern among businesses.

Nearly half of respondents (49%) identified cost pressures as a major challenge, representing a nine-percentage-point increase compared with the previous survey. The issue was most pronounced among transport and storage operators, hospitality businesses and construction firms.

The survey notes that the findings should be viewed in the context of escalating geopolitical tensions in the Middle East, which have contributed to higher international energy and transportation costs. Although energy prices remain subsidised in Malta, increased global costs continue to affect imported goods and business inputs.

Meanwhile, difficulties in finding suitable employees remain widespread, with 48% of firms citing labour shortages as a key challenge. However, this represented a slight improvement compared with the previous survey.

Concerns over weaker sales continued to ease, with only 14% of respondents reporting a slowdown in business activity, the lowest level recorded since the survey began.

Despite global economic uncertainties, businesses are increasingly confident about the future.

Almost half of respondents (48%) expect conditions to improve during the next six months, while only 10% anticipate a deterioration. The resulting net balance of 38% marks the highest level of business optimism recorded since the survey's inception.

The strongest expectations were reported within the knowledge sector, particularly among businesses involved in arts, entertainment and recreation activities.

Businesses expect cost pressures to continue throughout the year.

More than three-quarters of respondents (76%) anticipate higher input costs over the coming six months, with industrial enterprises and transport operators expressing the strongest concerns.

However, businesses appear reluctant to pass those increases directly onto customers. While one-third of respondents expect to raise selling prices, the majority (68%) believe prices will remain unchanged.

The survey also highlights robust employment and investment intentions among local firms.

Some 63% of businesses said they expect to expand their workforce in the short term, with positive hiring intentions recorded across all sectors. Demand is particularly strong for workers with technical and operational skills.

Investment activity is also expected to remain healthy. Nearly two-thirds of respondents (64%) indicated plans to invest during the next six months, slightly exceeding the level reported in September 2025. Businesses in the transportation and storage sector reported the strongest investment outlook.

The March survey included a special focus on access to external financing.

Nearly two-thirds of respondents (64%) reported having some form of external financing. Traditional bank loans and credit facilities remain the most common source of funding, accounting for 57% of surveyed businesses, while a smaller share make use of financing supported by government or development bank schemes.

Thirty per cent of businesses reported having no outstanding external financing.

When asked about access to financing, 36% of respondents described the process as straightforward, while 26% said obtaining finance was relatively difficult. The largest group, representing 38% of respondents, said they lacked sufficient information to assess the process.

Among businesses that encountered obstacles, administrative requirements and documentation burdens were identified as the most significant challenge. Other concerns included limited guidance on available financing options and the cost of borrowing.

The survey forms part of an ongoing effort by the two organisations to monitor economic developments in Gozo and provide policymakers and stakeholders with timely insights into the island's business environment.