Thirty per cent of business in Gozo reported better conditions in March, with 16% saying the situation is worse.

The Gozo Regional Development Authority, and the Gozo Business Chamber on Saturday published the results of the third Gozo Business Sentiment (GBS), portraying the results of the Business Sentiment Survey as at March 2025. The scope of the GBS is to gain deeper insights into sectoral developments and emerging trends. This survey is done at a 6 monthly interval.

This business dialogue effort aims to foster regular communication with businesses operating in Gozo, gathering timely data on recent performance, business activity expectations, investment and employment trends, and pricing dynamics. By doing so, the GBS complements official economic indicators, which are often available only with a time lag.

Additionally, businesses are encouraged to share perspectives on sector-specific developments and current economic issues, providing qualitative feedback that allows both the Authority and the Chamber to understand the underlying drivers of present and future economic trends. The sampling methodology remains the same over each period, together with the sampling stratification which reflects the economic composition of the Gozitan economy. The following are some of the highlights of the survey:

Business Conditions and Expectations

Business conditions in Gozo remained positive on balance over the past six months.

During the 6-month period from September 2024 and March 2025, 30% of firms stated that their business conditions had improved over this period, up from the 20% reported in the previous six months. At the same time, the share of firms stating that business activity worsened dropped to 16% from the 20% in the previous six months.

The secondary sector which primarily includes manufacturing and construction firms, and the services sector, with particular emphasis in the transportation and storage sectors, registered net positive balances of 17% and 15% respectively. However, this overall positive sentiment in services was partly offset by negative results in the accommodation and food service activities sector. Here, 22% of respondents reported improved conditions, while 33% reported deterioration, resulting in a net negative balance of 11%.

The share of firms, which reported relatively stable conditions during this period amounted to 54%, a drop from the 60 reported in September 2024.

The shortage of suitable employees to support business operations remains the most pressing challenge with construction (70%) and tourism related sectors (65%) the most notably affected. Overall, 53% of respondents identified this concern, an increase from 46% in September 2024.

In addition, 36% of businesses highlighted cost pressures as a challenge. However, concerns related to costs have continued a downward trend observed in recent months and are now nearly half the level reported in September 2023. Cost pressures were especially prominent in the transportation (67%), construction (60%), and accommodation and food services (56%) sectors. • Concerns about slowing sales were mainly reported by businesses in the construction sector, consistent with the previous survey round.

Looking ahead, business activity in Gozo is expected to be more optimistic over the next six months. In the period under review, 41% of firms anticipate an improved business activity, up from the 20% reported in September 2024. Meanwhile, the share of firms which expect business conditions to worsen over the next six months fell to just 9% from 31% in September 2024. Consequently, the net share of firms expecting an improvement in short term business conditions reached 33%, the highest expectations recorded since the start of this exercise. When analysing business expectations by sector, the tertiary (services) sector recorded the highest overall net positive balance. This optimistic outlook was particularly strong among businesses in the accommodation and food services sector, which reported a net positive balance of 89%.

Prices

66% of firms surveyed in March 2025 expect the prices of products and services essential to their operations to rise in the coming six months. This marks a decline in input price expectations compared to the results from September 2024.

The reduced incidence of input cost increases is also mirrored in firms' expectations for selling prices. In March 2025, 31% of businesses anticipated raising their selling prices over the next six months, down from the 39% in September 2024. This figure also marks the lowest level since the start of this exercise in September 2023, suggesting a cautious but steady easing of cost pressures.

Employment

The latest survey results show that 58% of firms intend to increase their workforce over the next six months. This marks an 18-percentage point increase compared to the previous survey conducted in September 2024 and is slightly higher, by 3 percentage points, than the figure reported in March 2024. These findings suggest that labour demand in Gozo remains robust, with no clear signs of slowing down.

Manufacturing, financial and insurance activities, and tourism related sectors such as transportation and storage and accommodation and food service activities were the sectors which showed the highest hiring momentums.

The most in-demand skills include those related to tools, machinery, and similar technical areas, alongside competencies in communication, teamwork, and related soft skills. Although to a lesser degree, computer-related and construction-related skills also emerged as key areas of demand. These findings are consistent with the results observed in September 2024.

Investment

55% of firms expect to invest during this period higher than the 48% in September 2024. The sectors most likely to register future investments are those within the manufacturing and industry sector (Secondary Sector), including construction.

A Focus on Wellbeing

The findings from the survey indicate that the most prevalent forms of employee wellbeing initiatives implemented by Gozitan businesses are those aimed at enhancing work flexibility and promoting work-life balance.

Beyond flexibility, some businesses are also investing in their employees' long-term professional development, with 24% of firms reporting that they offer opportunities for career growth and skills enhancement.

These initiatives reflect a broader understanding of wellbeing that encompasses not just immediate working conditions but also future aspirations and personal development.

Mental health support, a crucial and increasingly prominent component of workplace wellbeing, appears to be less commonly addressed. According to the survey results, only 14% of businesses in Gozo currently provide any form of mental health support to their employees.