Sales performance among Maltese small and medium-sized enterprises (SMEs) showed signs of improvement in 2025, although rising costs and ongoing structural challenges meant that profitability largely failed to follow suit, according to the Business Performance Survey 2025 published by the Malta Chamber of SMEs.
The SME Barometer, conducted between 8 and 21 January 2026 among 351 respondents from business operating in Malta, found that 43% of respondents reported an increase in turnover during 2025 compared to the previous year. At the same time, 31% said turnover remained unchanged, while 26% experienced a decline in sales.
However, the improvement in turnover did not translate into stronger profitability. 39% of businesses reported that profits remained the same as in 2024, while 35% said they were less profitable. Only 26% indicated that their business was more profitable in 2025, highlighting the impact of sustained cost pressures on margins.
Among businesses that recorded higher sales, the most frequently cited reasons were increased brand presence and improved marketing efforts, selected by 38% of respondents, and better sales strategies, such as offers and discounts, cited by 36%. Price increases due to external factors were mentioned by 17%, while diversification or changes in line of business accounted for 15%. Increased international sales and greater economic stability compared to 2023 were each cited by 13% of respondents. Respondents were able to select more than one response.
For the 31% of businesses whose turnover remained flat, rising operational costs were the dominant factor, selected by 45% of respondents in this category. Competitive market conditions were cited by 33%, while price sensitivity among clients accounted for 30%. Limited human resources affected 25%, with capacity constraints and external economic pressures also featuring. Respondents here were also able to select more than one response.
Among businesses reporting decreased turnover, 48% identified increased competition as the main cause. Customer spending power decreasing was cited by 38%, while inflation and labour shortages were each mentioned by 16%. Illicit trading and unfair competition accounted for 22%, while construction and infrastructure works affecting business activity were cited by 8%. Here, too, respondents were able to select more than one response.
Cost pressures were a central theme throughout the survey. Employee wages and salaries were identified as a main driver of price increases by 59% of respondents. This was followed by the cost of imported products at 40%, overhead costs excluding wages at 28%, and freight transport costs also at 28%. Regulatory compliance requirements were cited by 20%, while rent costs and bank charges and interest rates were each mentioned by around 18%.
The survey also highlight the key challenges currently facing Malta. The respondents identified a lack of good governance (33%) and overpopulation (30%) as the two most pressing issues. Other concerns include the level of corruption (24%) and the rise in inflation (24%), while safeguarding quality of life (21%) and ease of doing business (18%) are also seen as important. Environmental issues (14%), consumer buying power (11.5%) and the competitiveness of the tourism sector (9.5%) rank lower, with education (9%), the international situation (7%), public sector deficit (6%) and safety and security (3.5%) were also listed.
The survey also found that confidence in Malta's direction remains low. In Q4 2025, only 38% of respondents felt the country was moving in the right direction, while 62% believed it was heading the wrong way. Among those dissatisfied, the main concerns were the cost of living and affordability (27%) and quality of life and wellbeing (21%), followed by political leadership and direction (16%). Infrastructure and national planning (11%), government and regulation (10%), environmental responsibility (5%), social and governance issues (4.5%) and economic and financial pressures (4%) were also cited.
Trading conditions during the festive period were weaker for many SMEs. 44% of respondents reported that festive sales decreased compared to the previous year, while 30% said sales remained the same. Only 26% experienced an increase. The strongest trading period was between 1 and 23 December, cited by 33%, followed by Black Friday at 28% and Christmas Eve at 23%.
Beyond financial performance, sentiment towards the broader business environment was subdued. Respondents highlighted concerns around unfair competition, excessive bureaucracy, rising compliance costs, overpopulation and inadequate infrastructure. The survey also found that profit levels in 2025 were broadly similar to previous years, reinforcing concerns that rising costs continue to limit business growth.
The Malta Chamber of SMEs called for urgent action to address unfair competition and reduce administrative burdens. Recommendations include simplifying compliance processes, aligning labour migration policies with market needs, improving transparency and governance, better planning of infrastructure works, and implementing fully digitised government systems to reduce uncertainty and costs for businesses.