Prostitution and illegal drugs pumped €24 million into the economy last year, increasing by a fifth over 2014.
The black market economic contribution, seen by the Times of Malta, was calculated by the National Statistics Office and added to the island’s €8 billion GDP figure for 2015 - a significant jump from the €20 million recorded back in 2014. Although no explanation for the increase was given, NSO sources pointed to changing social trends as a possible cause.
Others meanwhile said the significant increase in tourism arrivals could be a major factor.
“The reasons behind the increase are varied. But, without a doubt, when you have more foreigners visiting the island, you get more spending on ‘entertainment’ including drugs and other illicit activity,” the sources said.
NSO sources pointed to changing social trends as a possible cause
The black market figures were added to the country’s GDP calculations as part of an EU-wide review of national accounts sys- tems implemented in 2013. According to details of the new system, less than one per cent of the population were engaged in the prostitution industry.
Figures on how many were involved in the importation and sale of narcotics remained unavailable. The new figures, which are based mostly on EU-wide formulas, provide a first glimpse into the effects of the unobserved economy and help build what the NSO believes is a “truer picture of the national economy”.
The sources said GDP was a calculation of national transactions and so, including such figures made sense as they were also transaction-based.
“This simply gives a better picture of the economy in terms of legal and illegal transactions,” the sources said.
Some estimates on irregular activities and their impact on the economy had been compiled by the NSO in the past but had never been published as part of the national accounts.
An NSO spokesman said that while Malta was obliged to gather this data, there was no formal market for such activities and their estimation was “challenging”.
Estimates in relation to narcotics, he said, were generally more reliable as these were based on a number of studies. However, when it came to prostitution, data sources were much more limited and Maltese estimates were still being derived by applying statistics derived from other European countries to the local variables such as population and demographics.
Meanwhile, the sources said that while the data collection was partially based on mathematical formulas, the NSO reviewed literature on these activities, including past studies on licit and illicit drugs as well as the national report on drug use. The NSO had even obtained the average street prices by type of drug from the police authorities, the sources added.
As had happened in 2014, the police confirmed that no drug production facilities were known to exist on the island, meaning the drug economy was an “import heavy” one.