Taking Stock 24 July 2025

ONE does not need to be a PhD student in modelling economics to ponder why some countries with minimal natural resources do much better than others.

Someone like me will wonder whether the explanation is location, better government, better corporate governance, a greater focus on education, better social values, or just a better gene bank.

For decades my Maltese wife and I have spent weeks in Malta, in their summer, and often I have written about anecdotal events. I have been encouraged to do this by the response of the Taking Stock audience, which I guess enjoys a moment of respite from the constant focus on business, investment and financial market development.

My circle of friends in Malta includes business leaders and retired senior government officials so it is natural that I learn.

This week I share in Taking Stock some data which might explain the surprising news that this tiny country, not yet grown to 600,000 people, is the world’s 33rd on a GDP per capita basis.

By way of comparison New Zealand, with far broader natural resources, is 24th highest, but only marginally better in only a few areas, certainly not in productivity.

Countries like Spain, Saudi Arabia, Kuwait, Portugal, Greece, Slovakia, Poland, Croatia, Turkey, Chile, Russia, China, Argentina and Malaysia trail well behind Malta.

Turkey, for example, has GDP per capita less than half that of Malta, as does Chile, China, Argentina, Malaysia, Brazil, Libya and South Africa, all of which have more natural resources.

So, what is Malta’s secret? The weather is a starting point. In June 2025, Malta’s first month of summer averaged an idyllic 26º, and there were on average 12 hours per day of bright sunshine, with breezes barely noticeable, and no rain. July, August and September would usually be warmer, still without rain, temperatures during the day averaging 30 degrees.

As a result of the weather and the relatively high safety factor, Malta attracted 374,000 tourists in May and 1.4m in the winter/autumn off-season. They spent on average six days holidaying here and spent around NZ$320 per day. Ninety percent stayed in hotels or other rental accommodation.

Nearly half the tourists came from Britain, Italy or France.

As there is little evidence of a boozing culture in Malta, the tourists do not include the British football crowd. Families find this an attractive factor.

Britain, with a population heading to 70 million, has 43 million tourists and believes this figure is too high and should be controlled by levies, perhaps set by individual councils.  The figure implies a little more than half a tourist for every Brit. NZ’s figure is similar to Britain.

Malta, by contrast has six tourists for every local, with the annual number of tourists now exceeding 3 million.

It seems remarkable to me that Malta’s infrastructure - airport, ports, roads, sewerage, water, accommodation, rental cars and restaurants - copes so well with such a tourism bulge.

In the first six months of this year tourism numbers are up 14%, from two years ago. Next year’s forecast is 4 million. Tourism has boosted GDP.

In 2023, Malta’s GDP was NZ$36.3b. The forecast for 2025 is NZ$39.2b, growth over two years of nearly 10%.

Within Europe Malta lies 10th in GDP per capita at around NZ$78,000, Europe’s average being NZ$75,000.

For comparison NZ’s GDP per capita is close to the Maltese figure.

The growth in GDP comes from tourism, precision engineering, pharmaceuticals and construction, the latter related no doubt to growing tourism.

About the physical size of greater Wellington, Malta currently has literally hundreds of cranes in sight working six days a week. Wellington might have ten.

The services sector accounts for 60% of the workforce. The government accounts for 9%. (NZ is at 14%.)

Unemployment is currently 3%, having fallen from the average of 5.4% for the years 1991-2015.

Government debt was NZ$20.1 billion in the last released figures, a similar level to New Zealand’s on a per head basis.

Malta offers a top tax rate of 15% to non-domiciled residents, a strategy that has captured wealth from many countries, some of this fuelling the construction industry, and thus the tourism figures.

Malta exports more (by 20%) than it imports. Tourism, engineering skills (it services Lufthansa planes), software technology and education are major earners.

Oil and natural gas are by far its biggest import cost, as is the case in NZ.

Curiously, Malta’s GDP per head is the 33rd highest in the world (NZ is 24th). Poland (43), Turkey (51), China (54), Russia (63), Mexico (64), South Africa (96), Indonesia (106) all have natural resources far beyond those of Malta.

Malta’s education and health systems are delivered with style that most rich countries would envy. The Maltese government fully funds undergraduate courses at the University of Malta, the Malta College of Arts, Science and Technology, and the Institute of Tourism Studies.

Tuition is free for Maltese and EU students. International students pay fees of up to NZ$24,000 per year, and more for post graduate fees.

The university teaching of medicine and dentistry is among the highest ranked in the world.

Secondary school education, conducted solely in English, attracts thousands of Europeans, most seeking to be employable in countries where English is the standard language.

The Maltese language is still spoken and taught but clearly a blockage for students who seek a career outside of Malta.

The excellent daily newspaper, Times of Malta, is published each day in English and Maltese and is of a standard well beyond the NZ newspapers. I note its columnists are people of achievement, making their views informed and worth reading.

The Maltese health system is amongst the best in the world, stemming from its excellent universities and its government focus on health. Hospitals are excellent and free. Although the Maltese grizzle about waiting times of sometimes a whole hour, the service is by most standards wonderful.

It is said that if you need a dentist, you will be in a dental chair within 15 minutes.

The road surfaces have greatly improved and are generally better than those in Wellington. Cars are small. Distances are short. The Maltese drive on the left and compete with New Zealand to buy second-hand cars from the likes of Japan.

Public transport is provided by modern buses.

The ancient city of Valetta is small. It is a walking-only city, sitting above the world-class harbour, flanked by walls built hundreds of years ago.

The harbour, of course, was once a sanctuary for British vessels in WWII.

With no natural resources like rivers, minerals or oil, little arable soil, bottled or desalinated water only, and no forestry, Malta’s success is at least partly due to its focus on education, health, engineering, lawful behaviour (the outcome of centuries of religious leadership), and a mindset that has no obsession with consumerism.

New Zealand would do well to send over observers and investigate how an educated public, with a work ethic, can achieve so much, with so little.

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HAVING written all of that, I need to record a balance.

High growth in salaries, GDP and in tourism numbers have attracted the criticism in Malta that Malta’s traditions and spaces are being compromised by too many tourists.

The level of distrust in the government is now similar to New Zealand’s over the past decade.

Corruption is suspected by the majority.

A Sunday Times of Malta article sarcastically queried the extraordinary 400% increase in disabled people on the island of Gozo, if measured by the growth in disabled car stickers. The article did note that the Labour government politicians had authorised the issue of thousands of such stickers in the past three years. A disabled car sticker allows the car owner to park outside his/her house. Labour voters appear to be a high percentage of those with a sticker.

There is a call to limit tourism numbers to avoid the type of water pistol attacks now common in Spain.

Much is still said of the Labour government led by Joseph Muscat ten years ago. It drove the growth. It also discovered the value of Panama trust law.

Malta has also had to reverse its policy of selling its passports to rich people. The policy contravened European Union rules.

For decades, waterside workers have been allowed to hand over their job to a family member when retirement beckoned. Indeed, within our own family there is evidence of three generations having transferred their well-paid, union-dominated jobs to sons or daughters. The EU is seeking to halt this tradition.

Rapid growth of immigrants has led to the population reaching 550,000, and projected to reach 600,000 in coming months, as more troubled parts of Europe, like Hungary, Romania, Albania and Georgia generate a stream of applicants for a Maltese work visa.

However, none of this dissuades me. Malta has a far better use of its resources and people than any other country I visit.

NZ would be wise to examine the Maltese formula especially in education, health, lawfulness and in keeping government out of the economy.

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Travel

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