New research highlights pressures shared by island economies and sets out a roadmap for sustainable growth

KPMG Islands Group has launched a new report, Beyond GDP - Sustainable Economic Growth in Island Economies, which highlights the unique pressures faced by small island economies, including Malta, and urges policy makers, businesses and investors to reconsider how economic success is measured and managed across island jurisdictions.

Against this backdrop, the report identifies many opportunities for islands, including the potential to learn from each other, share solutions and adopt tried and tested strategies to build productive assets and attract investment at scale.

The report is grounded in academic research led by Professor Matthew Agarwala of the Bennett Institute for Innovation and Policy Acceleration, supported by a multi-award-winning team from leading UK universities including Sussex, Heriot-Watt, Sheffield and Cambridge.

The findings span 12 jurisdictions, 11 of which are islands including Malta, and draws on over 30 expert interviews, detailed economic modelling and bespoke financial market analysis, as well as real-world ‘policy in practice’ examples.

This evidence base has been analysed to develop a set of actionable recommendations tailored specifically to the needs of island economies.

The report's findings provide a valuable lens through which to consider Malta's long-term economic outlook. While Malta's rapid growth has been supported by strong investment in human and physical capital, the report highlights a number of areas that will be important to address, including fiscal pressures, demographic challenges, infrastructure bottlenecks and energy-related risks.

To sustain long-term prosperity, the report identifies several priorities for Malta, including fiscal consolidation, continued investment in climate-smart and productivity-enhancing infrastructure, and reforms that strengthen institutional capital and resilience. The report also highlights the importance of progressing Malta Vision 2050 through a clear delivery plan, strengthening transparency and regulation, and reviewing energy policies to support long-term efficiency and investment.

Malta also features in the report's ‘policy in practice’ examples. The report highlights Malta's success in broadening its economic base through the development of multiple sectors, including tourism, financial services, manufacturing, real estate, technology, shipping and aviation. It also identifies Malta as a leading example of robust and internationally recognised data infrastructure, supported by the National Statistics Office, demonstrating the important role that effective economic measurement can play in supporting sustainable growth.

The research identifies six key challenges that are common, to varying degrees, across all the jurisdictions studied.

These interconnected challenges are placing increasing strain on island economies and require coordinated, forward-looking responses.

To address these issues, the report sets out ten interlinked priority actions, grouped under three themes - Strategic Priorities, Resilient Foundations, and Global Visibility & Collective Action.

Priority actions include focusing on sovereign wealth strategies, strengthening data infrastructure and measurement and accelerating AI adoption.

Rather than focusing solely on economic output, the report emphasizes the importance of managing a wider portfolio of assets, including natural, human, social, institutional, physical and knowledge capital, as the foundation for long-term prosperity.

A central theme of the report is the importance of regional collaboration. The scale of investment required to build resilient infrastructure, develop data systems and attract capital often exceeds the capacity of individual island economies.

The report concludes that by pooling resources, sharing expertise and aligning strategies, island jurisdictions can improve their collective ability to compete globally and secure long-term investment.

“By reframing how success is measured and focusing attention on the actions needed to underpin long-term prosperity, the report helps island economies move towards a more sustainable, resilient and inclusive future,” says Professor Matthew Agarwala who led the original research behind the report.

KPMG Islands Group is uniquely positioned to lead the conversation of long-term economic sustainability in islands. With a presence spanning 11 island jurisdictions and Guyana – in some cases for more than a century – the firm brings deep, on-the-ground insight into the policy environments, economic dynamics and challenges facing island economies.

KPMG Islands Group professionals live and work within these communities, combining local knowledge with global expertise and cross-border networks. With the publication of this report, the firm aims to convene stakeholders, share best practice and support collaboration across jurisdictions.

KPMG Islands Group is a regional member firm within KPMG providing Audit, Tax and Advisory services, with over 3,000 outstanding professionals working together to deliver value in The Bahamas, Barbados and the Eastern Caribbean, Bermuda the British Virgin Islands, the Cayman Islands, Guernsey, Guyana, Jamaica, Jersey, the Isle of Man, Malta and Trinidad & Tobago. Together we have global expertise, locally delivered.

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