As 2025 draws to a close, the global business and technology landscape is being redefined by a powerful mix of innovation and disruption. In 2026, Malta's economy is expected to stabilize its wealth generation and start to tackle the elephant in the room, waste management.
Surely, it will continue to excel in attracting more visitors (possibly reaching the five million mark) by offering a vibrant mix of nightlife, cultural events, and outdoor adventures, making it an exciting destination for budget airline tourists. Expect more world-class festivals, themed parties, and opportunities for activities like boat trips and diving in stunning crystal-clear waters. But it is not all blossoms and flowers.
The cruel witch donning a crooked hat shall parade us with the curse of an excessive deficit procedure. This is a mechanism established under the EU's Stability and Growth Pact, designed to ensure that Member States maintain sound public finances. Under EU rules, a government's budget deficit must remain below 3% of GDP, while public debt should stay under 60% of GDP or be on a clear downward path.
If a Member State exceeds these thresholds, the European Commission launches the EDP, requiring the country to submit a correction plan that outlines how it will restore compliance. The procedure can lead to enhanced monitoring and, for eurozone members, potential financial sanctions if corrective measures are not taken. Can we be spared the sour medicine?
Malta entered the Excessive Deficit Procedure in 2024, after its deficit exceeded the 3% threshold as public spending remained high in the aftermath of the pandemic and energy subsidies weighed on government finances. But our crystal ball shows a silver streak. Hope springs eternal that 2026 will lead us to a faster than expected recovery. Strong employment, robust investment, and resilient domestic demand support revenue growth, while the government has begun phasing out Enemalta relief measures. The Ministry for Finance projects the deficit to narrow to 2.8% of GDP in 2026, well below the EU limit, marking a significant fiscal turnaround. What other marvels are in store to accommodate a renewed surge of foreign population. I find it very difficult to reconcile the tepid emphasis on our lack of fertility by natives while the reality out there is one of overpopulation given our current capacity of TCN's.
I would have liked a bi-partisan study on the exposition of the positive and negative impacts of foreign influx of labour on rents, wages, the economy at large as well as quality of life. Please give us some idea of the medium-term plan including the integration of migrants and how to live with this new reality.
There was a hint at reducing dependence, adding skill tests, but not much else. Fertility and childbearing incentives will only bear fruit, if at all, in the longer term, not as a result of cash handouts but a healthier ecosystem.
Sadly, 2026 will be a year where the public sentiment is redolent of frustration and confusion. A unique way to predict the future was for TOM to ask two experts what to expect in 2026: the year of the fire horse in the Chinese Zodiac. This Horse brings passion, action and new opportunities. Quoting Marie Briguglio, Associate professor of economics at the University of Malta, she bemoans inter alia about demographics and the issue of living with a large and foreign population, in the present day and the medium-term plans of this economic model.
Even the growth sectors of the economy are population dependent: the increase in tourism to four million is not without its consequences, as anyone living in our narrow roads is well aware. It is probably also time to address unexplained wealth and tax avoidance by the very rich (later day oligarchs frolic openly in berthed luxury yachts), something that the finance minister has hinted at.
Likewise, it is high time we reduced the number of cars on the road (using parking fees, robotaxis, circulation taxes, etc...) to make way for other modes of transport. The budget minister has hinted at this too, but sadly it did not make the budget. Another prognosis was given by Chartered financial analyst Patrick DeBattista. He focused on holistically strengthening our citizens' financial, mental and physical well-being, because these are all interconnected. In his opinion this means to involve qualified, independent financial experts to deliver a nationwide financial education programme: teaching people how to budget, invest and understand where their taxes go. This would have a compounding effect. It would reduce dependency on short-term state handouts and help build financial empowerment.
Beyond, our shores expect the fragile peace in Gaza to hold, but conflicts will grind on in Ukraine, Sudan and Myanmar. Russia and China will test America's commitment to its allies with "grey zone" provocations in northern Europe and the South China Sea. As the line between war and peace becomes ever more blurred, tensions will rise everywhere. Will the bubble burst?
As was the case with steam, then railways, electricity and the internet, a crash would not mean that the technology does not have real value. But it could have wide economic impact. Either way, concern about AI's impact on jobs, particularly those of graduates, will deepen.
Expect the US president to still crave for a Nobel peace prize. In a convoluted way, Europe must continue to increase defence spending, boost it anaemic growth and deal with huge deficits. Comments cannot omit mentioning Gen AI. Expect in 2026, for this prodigy to mature, evolving from creative companion to strategic co-pilot as organisations unlock efficiencies once buried in complexity. Sustainability is a key influence on tech trends, with it shifting from compliance-driven to growth-focused, now deeply embedded in the design and training of AI systems. As well as this, quantum computing is edging closer to practical reality. 2026 could be a turning point for media as it layers stories upon stories.
The growing Netflix dominance feels participatory now. We may reach a peak of the reboot renaissance. But strong voices shall be expected to emerge. Globally, try to embrace Gen Z and Gen Alpha who continue to drive the scene. They share, comment, and create every moment. The media landscape may change rapidly. The biggest events in 2026 set new trends for storytelling and video clips.
Many wonder: are we entering a creative golden age or will fatigue set in? Only time will tell. One thing is certain: by the end of 2026, Malta voters will be called to tick the red or blue box. It is decision time. Will this usher the start of a new era? Or was it the climax of an old one? Who of the two "body builder" leaders will carry the baton? The year of the biggest events is omnipresent. It promises a wild ride. Keep tight to the clutches of the mystery balloon.
George M Mangion is a Senior Partner at PKF Malta