In the coming years, Malta is set to enjoy the strongest economic growth among EU countries, according to a credible forecast by the European Commission and a number of reputable international and independent credit agencies. Economic growth was forecast to be 4.2% in 2025. The general government deficit was expected to decrease gradually from 5.7% of GDP in 2022 to 4.1% in 2025.

Malta is expected to maintain a high pace of employment and population growth, a key factor driving the outlook for consumption despite the expected weak recovery in real wages. Employment continued to grow very strongly in the first half of 2025 and is expected to continue growing. This increase was fuelled by strong labour demand which increased across all sectors of the economy, both public and private, and was especially strong in tourism and administrative services.

The labour force is set to continue growing at a robust pace in the coming years, in line with population growth, as the country continues to attract foreign workers. Malta's unemployment rate fell to 2.9% in 2022 and is expected to fall further in the next few years.

Economic conditions often inform the policy changes that governments elect to enact. Specifically in our country, government policy has always had a large amount of influence on economic growth, the creation of new business entities and the success of financial markets. In the broadest sense, our country's economic activity reflects what people, businesses and the government want to buy and sell.

The government may decide to regulate some aspects of economic activity in order to engineer economic growth or prevent negative economic conditions in the future. In general, the government's active role in responding to and influencing the economic circumstances of our country is for the purpose of preserving and furthering the economic interests of the general public.

For those in political power, having a track record of economic growth is often an important consideration (especially if they are in a position to seek re-election). To ensure strong economic growth, there are two main ways that the government may respond to economic activity.

One of the most common ways that the government may attempt to influence our country's economic activities is by adjusting the cost of borrowing money. This is what monetary policy is all about.

Coupled with that, there is the pivotal importance of a sound fiscal policy. The government may also enact policies that adjust spending, change tax rates or introduce tax incentives. In regard to government budgets, the government identifies whether or not it wants to spend more money than it anticipates collecting. This process of evaluating public spending aims to promote economic prosperity or cool an overheated economy.

Fiscal and monetary policies are both intended to ramp up the speed of the economy's rate of growth.

All of the above might paint a somewhat rosy picture of our robust economy. But it does not portray the full picture, and there are a few downsides to it.

Economic growth should provide the basis for overcoming poverty and raising living standards. But for growth to be sustained and inclusive, its benefits must reach all people. While strong economic growth is necessary for economic development, it is not always sufficient.

Over the past few years, growth has raised living standards and provided job opportunities, lifting hundreds out of extreme poverty. But we have also seen a flip side. Inequality has risen in our advanced economy and remains unacceptably high. This should worry our policymakers for good reason.

It should be clear that a persistent lack of inclusion, defined as broadly shared benefits and opportunities for economic growth, can fray social cohesion and undermine the sustainability of growth itself. Lack of inclusion results in both unequal outcomes and unequal opportunities. True, income inequality, the most widely cited measure of inequality in outcomes, has been declining. The decline is due in large part to strong growth in our emerging market and developing economy, although inequality is still attributable to differences in average income.

Technology and economic integration have brought large benefits to our economy, but the benefits have not always been broadly shared. Both technology and trade have been driving forces behind growth and productivity. Technology has increased the demand almost exclusively for skilled labour, while trade has sometimes displaced lower-skilled workers. Greater integration of our economy has also resulted in the relocation of factories and greater use of equipment, displacing workers.

So, what can be done to foster inclusive growth? The answer is to focus on policies that offer opportunities for all. Our policymakers must design measures that can mitigate potential compromises between the objectives of raising growth and reducing inequality. Closing the outcome gaps in education and health between advantaged and disadvantaged groups can reduce inequality and promote growth.

Extending the fruits of growth to the widest possible group of people is not easy and clearly requires a gargantuan effort. But it is not impossible.

Whether or not the government should intervene in the economy is a deeply-rooted philosophical question. Some believe it is the government's responsibility to protect its citizens from economic hardship. Others believe the natural course of free markets and free trade will self-regulate as it is supposed to.

At the end of the day, the government might be forced to enact legislation to promote economic well-being and equity across different socioeconomic classes.

Mark Said is a lawyer