Malta’s economy expanded by 3.9% during the first quarter of the year, according to figures released by the NSO, marking growth that significantly outpaced the rest of the Eurozone area.
NSO figures show that the country’s economic growth was driven primarily by the services sector and stronger domestic demand. Services contributed 3.2 percentage points to overall GDP growth, led by gains in information and communication, financial and insurance activities, and professional and scientific services.
Household and government spending also remained strong, with final consumption expenditure increasing by 5% in real terms, while investment in fixed assets rose by 3.6%.
The NSO said employee compensation increased by €232.5 million over the same quarter last year, helping push total worker income to record levels. Meanwhile, Malta’s Gross National Income for the first quarter of 2026 was estimated at €5.6 billion, while inflationary pressures, measured through the GDP deflator, rose by 3% year-on-year.
The government said in a statement that the growth rate was stronger than forecasts issued by institutions such as the Central Bank of Malta and the International Monetary Fund. It also highlighted that Malta’s economic expansion was around five times higher than the Eurozone average during the same period.
Compared to some of Europe’s largest economies, Malta’s performance was even more pronounced. The Maltese economy grew six times faster than Italy’s and thirteen times faster than Germany’s, the government said.
Domestic demand remained the primary driver of economic growth in the first three months of the year. Nearly half of the increase in economic activity was attributed to higher household consumption, supported by record levels of worker income.
According to the statement, employee compensation reached a historic high of €2.8 billion, representing an increase of more than 9% over the previous year. Around a quarter of that rise was linked to the new collective agreement for public service employees.
In addition to stronger consumer spending, economic activity was also boosted by increased investment and higher government expenditure.
Malta’s international balance of payments also improved over the past year, with exports rising by nearly €288 million despite what the government described as a challenging international environment marked by slower global economic growth and tariffs imposed by the United States government.
The government said that Maltese companies have remained competitive in contrast to businesses in other countries because they have not faced high energy prices, while Malta has also avoided introducing new taxes implemented elsewhere in Europe.
The digital sector accounted for nearly a quarter of Malta’s economic growth during the quarter, while professional and administrative services, as well as financial services, also recorded improved performance.
Strong contributions were also registered in the hospitality sector, particularly hotels and restaurants, driven by continued growth in tourism. Retail activity also remained robust, supported by resilient domestic demand.
The government contrasted Malta’s economic performance with that of other European countries where, it said, families are being negatively affected by austerity measures, tax increases, and cuts in social spending.