Issue link: https://maltatoday.uberflip.com/i/1529157
3 BUDGET2025 maltatoday | SUNDAY • 10 NOVEMBER 2024 Maltese economy compared to 2012. This growth was largely driven by net migration, but the coun- try also experienced a shift in its age structure. The propor- tion of individuals aged 65 and over rose from 17.1% in 2012 to 18.4% in 2023. This trend is attributed to rising life ex- pectancy, which reached 83.6 years in Malta, surpassing the EU27 average of 81.5 years. A decrease in the propor- tion of the population aged 14 and less, which dropped from 14.6% in 2012 to 12.3% in 2023, coupled with rising life expec- tancy, indicates a shrinking younger population and an expanding older population, leading to the demographic challenges faced by Malta. These demographic shifts result in rising dependency ratios, which measure the pro- portion of the population that is typically not in the work- force, young and elderly, rel- ative to the working-age pop- ulation. A higher dependency ratio signifies a greater burden on the working-age population to support those who are not working. In Malta, the old-age depend- ency ratio (OADR) rose by 1.5 percentage points to 26.5% in 2023 compared to 2012. This means that the elderly popu- lation is increasing at a fast- er rate than the working-age population, placing greater pressure on the workforce to support the growing elderly population as well as financing national healthcare, social ser- vices and pensions. Net migration has played a crucial role in mitigating these demographic challenges Al- though declining, net migra- tion in 2023 remained above pre-pandemic levels. This in- flux of working-age migrants has helped to meet labour market demands and partially offset the effects of the ageing population and declining birth rate. However, continued reliance on migration presents its own set of challenges, such as in- tegration and potential social and economic pressures. Labour market Malta's labour market ream- ins resilient, experiencing no- table employment growth and maintaining low unemploy- ment rates In the twelve months leading up to the second quarter of 2024, the number of employed individuals in Malta (aged 15- 64) increased by approximate- ly 18,417 – an employment rate of 78.4%, a 2.0 percentage point rise compared to the pre- vious year. Malta's employment rates at the end of June 2024 signifi- cantly surpassed the EU27 av- erage, with a difference of 7.5 percentage points. The age group of 25-54 years exhibited the highest employ- ment rate, with approximately 89 out of every 100 individuals in this group employed, mark- ing a 1.0 percentage point im- provement compared to the same quarter in the previous year. Although having the lowest employment rate at 49.4%, the 15-24 age group experienced the largest annual increase, with a 2.7 percentage point rise. Full-time employment in the private sector as of April 2024 had increased by 7.3% com- pared to the previous year, mainly due to direct produc- tion sectors; construction contributed significantly to employment growth, with a 2.6 percentage point increase; manufacturing also played a vital role, contributing a 2.2 percentage point increase in employment. The expansion in market ser- vices contributed 7.3 percent- age points to the growth in full-time employment. Signifi- cant contributions came from: accommodation and food ser- vices activities (1.5pp); admin- istrative and support service activities (1.5pp); wholesale and retail trade (1.3pp). Unemployment rates con- tinued to decline, reaching 3.2% by the end of the second quarter of 2024. This marked a 0.6 percentage point de- crease from the same period in 2023. Malta consistently outperformed its European counterparts in maintaining low unemployment rates. As of August 2024, Malta's unem- ployment rate stood at 3.0%, considerably lower than the European Union average. International trade Malta heavily relies on im- ports to meet domestic de- mand, and experiences a per- sistent trade deficit, which it offsets this through robust service exports, particularly in tourism and financial services. This leads to a consistent cur- rent account surplus and posi- tions Malta as a net lender in the global economy. In the first eight months of 2024, total imports increased by 1.4% compared to the same period in 2023, reaching €6,058.1 million. This growth was driven by higher imports of fuels and lubricants (€243.0 million increase) and semi-fin- ished industrial supplies (€189.0 million increase). However, when excluding volatile trade chapters like mineral fuels, aircrafts, and ships, imports experienced a slight decrease of €15.3 mil- lion – with reduced imports of items like fish, vehicles, opti- cal instruments, plastics, iron/ steel articles, and paper. Total exports in the first eight months of 2024 increased by 11.3% compared to the same period in 2023, reaching €3,178.8 million. This rise was mainly attributed to a €225.1 million increase in exports of fuels and lubricants. Despite a significant trade deficit, Malta generally main- tains a surplus in its current account. This surplus is attrib- uted to the strength of its ser- vices exports, especially in the tourism and financial services sectors. In the first half of 2024, the current account surplus in- creased to 5.5% of GDP, com- pared to 3.9% in the same peri- od of 2023. This improvement is driven by higher exports of travel and financial services. A decrease in the proportion of the population aged 14 and less, which dropped from 14.6% in 2012 to 12.3% in 2023, coupled with rising life expectancy, indicates a shrinking younger population and an expanding older population, leading to the demographic challenges faced by Malta.