Another SME barometer measuring business performance was released by the Chamber of SMEs last week, and within it - as always - one can paint a picture of how Malta is developing from a business perspective.

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 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%.

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%.

There is an interesting picture to be drawn here.  Almost half of businesses cited increased competition as a reason for decrease in turnover - and an increase in competition is in many ways can be related to a strong economy, because it is allowing new businesses to open their doors.

However, at the same time, almost 4 out of every 10 businesses are concerned by the decrease in customer spending power, which indicates that there is less disposable income among the general public to be spent.

Perhaps related to this though is that 59% of businesses cited employee wages and salaries as a main driver of price increases.  We are in a situation where spending power is decreasing - and perhaps that doesn't come as much of a surprise because Malta's median and average wages remain significantly below the European averages.  Yet any improvement to these wages ultimately results in price hikes, hence rendering these increases almost null.

The survey also highlighted 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.

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%).

It remains concerning that the lack of good governance and corruption remain high on the list of business concerns.  Ultimately, these topics do not bode well for the economy as well: almost a quarter of businesses themselves said that illicit trading and unfair competition has negatively affected them.

Ultimately, when businesses feel that the environment they are operating in is not level or fair, it will have a knock-on effect in their investment, in the economy, and, the country.