Commercial loans extended to Maltese businesses grew 5.7 per cent in June 2025, largely driven by higher lending to the accommodation and food services sector.

The increase in borrowing by hotels and restaurants, noted by the Central Bank of Malta, is likely a result of Malta’s booming tourism sector, which registered the sharpest growth in Europe in the first half of the year.

The rising credit flows point to renewed confidence in tourism and hospitality, suggesting that operators are investing in property upgrades, new facilities, or expansion projects, anticipating continued demand from international visitors.

The construction and wholesale and retail trade sectors also registered an increase in credit in each of the first six months of the year, albeit at a slower pace indicating steady but cautious investment – enough to sustain activity, but not at the rapid pace seen in earlier years.

Construction may be constrained by tighter regulation and higher costs, while the slower credit uptake in wholesale and retail trade could reflect changing consumer behaviour, with more spending shifting online.

On the other hand, loans to the IT and manufacturing sectors decreased every month in the first half of the year – a trend that could be cause for concern.

For IT, reduced lending could mean firms are delaying expansion or scaling back after a period of fast growth, potentially dampening Malta’s ambitions to position itself as a digital hub. In manufacturing, weaker credit demand may point to cost pressures, subdued exports, or increased competition, raising questions about the sector’s competitiveness.

Taken together, these patterns highlight a Maltese economy leaning more heavily on tourism-related investment, while areas critical for long-term diversification –technology and manufacturing – appear to be losing momentum.

Policymakers and investors may therefore need to strike a balance: supporting the buoyant accommodation sector while finding ways to reinvigorate credit flows to industries that can strengthen Malta’s long-term economic resilience.