Every March, Gozitan firms tell two institutions how the Gozo's economy actually feels. The Gozo Regional Development Authority (GRDA) and the Gozo Business Chamber (GBC) have run their joint Gozo Business Sentiment survey since 2023. The exercise now spans six data points, stretching from September 2023 to March 2026. Reading the March 2026 edition against its March 2025 predecessor reveals an island in transition. Gozo has largely solved last year's problem and promptly gained a new one.
Start with the headline mood, which has brightened considerably over 12 months. In March 2025, 30% of firms reported improved conditions, while 16% reported deterioration. The net balance then stood at a modest 14%, respectable but unremarkable. A year later, 34% reported improvement and only 9% reported a decline. The net balance now reaches 25%, comfortably above the 11% average across all survey rounds. The figure sits five points below the record 30% registered in September 2025. Yet the year-on-year direction remains unmistakably upward, and the composition of the gain matters more.
The most telling reversal concerns Gozo's hospitality trade, the island's economic bellwether. In March 2025, accommodation and food service activities posted a net negative balance of 11%. One in three operators in the sector then reported worsening conditions. Twelve months later, the same sector leads the entire services category in positive sentiment. The secondary sector performs even better, posting a 38% net balance with no firm reporting deterioration. A sector that dragged the average down last spring now pulls it up.
The deeper story, however, lies in what keeps Gozitan business owners awake at night. For two and a half years, the answer never changed: finding workers. In March 2025, 53% of respondents named staff shortages as their most pressing concern. Cost pressures then ranked second at 36%, continuing a steady two-year decline. The March 2026 survey turns that hierarchy upside down for the first time since September 2023. Costs now top the list at 49%, a nine-point jump in six months. Labour shortages slip to second place for 48%, still severe but no longer supreme. Education, health, and social work activities again report the worst recruitment difficulties. Construction and hospitality also continue to struggle for staff, despite the improved mood.
Geography explains the reversal more than anything happening on the island itself. This round becomes the first to capture the escalated Middle East conflict's commercial fallout. Malta's energy subsidies shield firms from direct price shocks at the meter. They cannot shield anyone from dearer imported inputs, delayed deliveries, and climbing shipping rates. Transport and storage operators feel the squeeze most acutely, followed by hospitality and construction. Several respondents volunteered geopolitical uncertainty as a concern in its own right. A small island that imports nearly everything absorbs the world's troubles through its supply chains.
The price expectations data sharpen this picture into something approaching a margin squeeze. In March 2025, 66% of firms expected their input prices to rise. That figure has now climbed to 76%, ten points higher in a year. Selling price expectations have barely moved at all. Only 33% of firms intend to raise their own prices, against 31% last year. Two-thirds plan to hold prices steady, while three-quarters expect costs to climb. Gozitan firms are absorbing inflation rather than passing it on to customers. That speaks well of competitive discipline and poorly of profitability six months from now. Something must eventually give, and the September round will show what.
Despite cost anxiety, forward-looking confidence has never measured higher in this exercise. In March 2025, the net balance of expectations reached 33%, then a record. March 2026 breaks it again at 38%, with 48% of firms expecting improvement. Each spring round now sets a fresh high, which invites a note of caution. The survey itself acknowledges a clear seasonal rhythm in Gozitan optimism. March readings consistently outshine September ones, as firms look toward the summer trade. The records are real, but the calendar deserves some of the credit.
The labour market data reinforces the sense of an economy still expanding. Some 63% of firms plan to hire within six months, against 58% last year. Three in ten actually increased their workforce over the past half-year. The skills profile has shifted quietly significantly since 2025. Last year, demand centred on tools, machinery, and related technical competencies. Computer and related skills now top the list, with machinery skills close behind. Meanwhile, no surveyed firm seeks agricultural, fishing, artistic, or creative skills. Gozo's enterprise economy is digitising at the edges while its traditional callings find no commercial demand. That detail says as much about the island's direction as any headline percentage.
Investment intentions tell the same expansionary story with slightly stronger numbers. In March 2025, 55% of firms expected to invest over the coming six months. The figure now stands at 64%, with 56% having already invested recently. Every surveyed transport and storage firm plans capital spending in the short term. The knowledge sector led actual investment, with 78% of its firms committing capital.
Each survey rotates a thematic section, and the contrast between editions proves instructive. The 2025 round examined employee wellbeing and found flexibility common but mental health support rare. The 2026 round of external financing, a hard-edged and timelier subject. Some 64% of firms currently use external finance, overwhelmingly conventional bank lending. Only 7% draw on government or development bank schemes such as the Malta Development Bank. Most firms without borrowing simply say they need none, a sign of healthy balance sheets. The striking number hides elsewhere: 38% cannot assess how easy financing is to get. Among firms that perceive obstacles, administrative and documentation burdens rank first. A lack of information or guidance follows close behind. Gozo's financing problem looks less like scarce credit and more like scarce knowledge.
Set side by side, the two reports chart genuine progress with identifiable fault lines. Sentiment, hiring, investment, and outlook all read stronger than a year ago. Hospitality has recovered, sales worries have fallen to an all-time low of 14%, and balance sheets look sound. But the island has exchanged a domestic constraint for an imported one. Workers remain scarce, costs now climb, and margins quietly bear the strain. The policy agenda writes itself from these pages. The government should simplify access to financing schemes and promote them far more energetically. It should watch the widening gap between input costs and selling prices closely. And it should treat record optimism with the scepticism every March reading deserves. Gozo's businesses have earned their confidence through resilience, not through easy conditions. The September survey will reveal whether that confidence survives a costlier world.