Credit rating agency Morningstar DBRS has confirmed an A rating, it believed risks to Malta’s credit ratings remain balanced with the economy having strongly recovered from the pandemic. It reported real GDP increase by 18% between 2019 and 2023, compared to an increase of just 3.3% for the euro area, driven by a rebound in tourism and strong growth in other important service industries such as professional services, information and communication (ICT), gaming and trade.
Malta is proud to be classified as an advanced economy by the International Monetary Fund and considered a high-income country by the World Bank. Fitch rating agency attributed our high A+ grade mostly to the full recovery of the tourism sector, which closed last year with almost three.4 million arrivals, exceeding 2023 figures.
Ryanair announced that there will shortly be 57 routes for Malta, including 6 new ones to Glasgow, Luxembourg, Norwich, Newcastle, Gothenburg and Palma. It added that there will also be an increase in frequency for 20 other routes, including Milan, Porto, Bucharest, and London. Ryanair said that this is a $100 million investment which will create another 30 jobs for pilots and cabin crew at the Malta International Airport. In all, this represents a total investment of over $1 billion on Malta. Ryanair, said that this growth supports over 4,300 local jobs, and added that it will continue to reinforce its long-term commitment to Malta.
The low-cost carrier has forecast that the updated schedule will raise passenger traffic to more than 5.2 million in 2025, an increase of 15 per cent compared to this year. Yet, no economy is perfect but certainly on strength of tourist and industrialisation the country advanced a lot since Independence and gradually shed our fortress mentality as an ex-British colony.
Talking about tourism, we cannot ignore the multiplier effect this has had on our economy. Around the world, airlines, hotels and travel businesses are pleased to witness the return of tens of thousands of tourists. Some are basing their hope of a revival starting in the Asian market. The lifting of quarantine rules effectively opens the door for many Chinese to go abroad for the first time since borders were slammed shut three years ago. Perhaps Malta stands to gain.
It is blessed as one of the sunniest European destinations with a good climate all year round, making it an ideal location for a short getaway. Obviously, many have written to the tourism ministry to ensure a better upkeep and higher cleanliness level in all zones. Fingers crossed, numbers are expected to reach four million visitors this year.
On second thoughts economists question how no studies have ever surfaced over the years to discover the actual value added (GVA) that the sector contributes to the economy after deducting infrastructural costs, airport maintenance, environmental and ecological damage, food and beverage costs and State subsidies to low-cost airlines.
One hopes that Tourism Minister Ian Borg will commission a GVA study as he has already done on related topics.
Let us now nostalgically reflect on the origin of tourism, as it surfaced in the early sixties. This new industry was warmly welcomed and supported by politicians as a pivotal means how to balance annual budgets and create lucrative jobs for hundreds. Now, that two years of pandemic shutdowns are over, the finance minister wants to catch up on lost revenue.
Former Labour MEP Marlene Mizzi, stockbroker Paul V Azzopardi and former Air Malta chairman David Curmi (see picture above) are the three directors in the triumvirate of national airline, KM Malta Airlines.
The plan was to dissolve Air Malta and replace it by a new carrier (KM Airlines). This is now a reality, and the IATA granted us our wings appellation.
No official reason was given by management to explain why the Air Malta service has suffered so much degradation and financial woes. All this compounds the issue that even the Ryanair chief has admitted; one cannot rely on KM Airlines with its under capitalized structure, having just eight leased aircraft at its disposal.
On the bright side, prospects for tourism this year look excellent and provided Europe avoids the pangs of a mild recession, there is a feeling of so-called revenge tourism with millions of travellers having unspent cash in the drawer, saved during two long years of restrictions.
Nostalgically, six years ago, ex-prime minister Joseph Muscat was bullish about the tourism sector, projecting that soon we should start attracting rich tourists who spend up to €5,000 a night lodging in super luxury hotels. Notice the starting gun is fired by the court decision not to revoke planning permission on the DB mega site. This will join more tower cranes hired to build pristine hotel towers such as the massive Villa Rosa complex, P.X luxury tower, Mercury towers, Ramla Bay towers, Gap Tigne hotel, Comino bungalows, rebuilding of the Mellieha bay complex (a larger footprint than previous) and possibly more luxury towers by Corinthia.
Such superlative investment is fertile seed sown to attract quality visitors in the near future.
George M. Mangion
George Mangion is a senior partner of PKF, an audit and consultancy firm, He can be contacted at [email protected] or on +356 21493041.