A report by the International Monetary Fund last week has both resulted in praise for Malta's economic situation, but also underlined the need to change strategy moving forward.

"On February 4, 2026, the Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Malta. Malta's economy has maintained robust momentum, with annual growth averaging nearly 7% over the past decade led by tourism, online gaming, and professional services alongside significant inflows of foreign workers. GDP growth is estimated to have slowed to 3.9% in 2025, which is still considerably higher than the EU average."

It went on to say: "The influx of foreign workers that fueled economic activity in the past has also strained infrastructure and public services, highlighting the limits of the current labor-intensive growth model. This labor-driven growth is expected to continue in the medium term, but slow in longer term since Malta cannot sustain a continued population increase. Inflation declined to slightly above 2% while fiscal consolidation has kept public debt on sustainable path. The financial sector remains sound and well-capitalized."

The rate with which Malta's population has grown over recent years can only be described as rapid. The overpopulation problem in the country is nothing new, and over the past few years the situation has been highlighted numerous times. The population boom was not properly catered for, and as a result infrastructural strains are there for all to see. From traffic, to over-construction, from parking issues to other infrastructural problems. These are issues which do have an impact on people and businesses alike. The government now has been taking some action to try and tackle the issue. For instance, it introduced limitations on the number of third country workers able to come in to the country to work in certain specific sectors.

But what is really needed is an economic evaluation to draft the road forward. The IMF writes: "Executive Directors commended the authorities' sound macroeconomic management with Malta enjoying one of the highest growth rates in Europe over the past decade, and public debt on a sustainable trajectory. Noting that risks are tilted to the downside and Malta's labor‑intensive growth model appears to be approaching its limits, Directors emphasized the importance of transitioning toward a more productivity‑driven growth path, while preserving macroeconomic stability."

The aim should be to increase productivity, which is where AI and technological advancements could prove useful, or to attract investment in sectors which are less labour intensive but are higher-paying.

Of course this will also require more investment and plans on reskilling and upskilling the workforce to be able to fill those jobs, and address any skills shortages which exist. But the country cannot continue increasing the population as it has been. There is, after all, limited space.