Annual growth in business activity has returned to its long-term average

Central Bank of Malta issues July Economic Update

The Bank’s Business Conditions Index for June indicates that annual growth in business activity has returned to its long-term average estimated since January 2000.

The European Commission’s Confidence Survey shows that economic sentiment in Malta edged down in June when compared with a month earlier, but still remained above its long-term average, which is estimated since November 2002. When compared with May, sentiment deteriorated strongly in the retail sector, and to a smaller extent among consumers and in the construction sector. These developments were partly offset by improved sentiment in industry and the services sector.

Additional survey information shows that compared to May, price expectations eased across all sectors, with the largest decline recorded in industry. However, they remained elevated from a historical perspective.

The European Commission’s Uncertainty Indicator for Malta decreased when compared with May, signalling lower uncertainty. This was driven by developments in services and industry, as in other sectors uncertainty increased.

In May, industrial production contracted in annual terms, though at a smaller rate compared with April. Meanwhile, the volume of retail trade rose at a slower pace than in the previous month.

The unemployment rate was unchanged from a month earlier and below last year’s rate.

In June, both the number of promise-of-sale agreements and final deeds of sale fell on a year- on-year basis, while both commercial and residential permits rose in May relative to their year- ago levels.

The annual inflation rate based on the Harmonised Index of Consumer Prices (HICP) stood at 6.1% in June, up from 5.8% in the previous month. Inflation based on the Retail Price Index (RPI) also rose, reaching 6.2% in June from 6.0% a month earlier.

In May 2022, the Consolidated Fund recorded a surplus compared with a deficit a year earlier as government revenue rose at a much faster pace than government expenditure.

Annual growth in residents’ deposits remained strong in May, rising by 11.1%. Meanwhile annual growth in credit to Maltese residents moderated to 6.8%. By the end of the month, 628 facilities were approved and still outstanding in terms of the Malta Development Bank (MDB) COVID-19 Guarantee Scheme, corresponding to total sanctioned amounts of €486.6 million. In May, three loan facilities were approved under a new MDB Subsidised Loans Scheme aimed at importers and wholesalers of wheat and animal feeds, covering total sanctioned lending of €15.6 million.

The full Economic Update is available here.