Business conditions remain above their long-term average – Central Bank of Malta

Economic activity in Malta continues to show solid momentum, according to the Central Bank of Malta. The bank’s Business Conditions Index indicates that in May, annual growth in business activity edged slightly upwards and remained above its long-term average. Manufacturing and retail trade increased in April, as did services production in March. In April, tourism activity continued to perform well.

As from May, the European Commission suspended business survey results for Malta (and Estonia), due to changes in partner institutes. Consequently, the Economic Sentiment Indicator, the Employment Expectations Indicator and the Economic Uncertainty Indicator are not available. However, the consumer sentiment indicator remains available, and it improved significantly in May.

Overall, conditions in the property market remain strong. In May, approved commercial permits increased compared with a year earlier. On the demand side, both the number of residential promise-of-sale agreements and the number of final deeds of sale decreased in May, compared with a year earlier.

In May, unemployment expectations, as published by the European Commission, rose to stand above their historical average. The unemployment rate increased slightly to 3.6% in April, and stood above the previous month’s rate and the rate recorded in the same month a year earlier.

Malta’s inflation rate declined in May and stood well below that in the euro area. The annual inflation rate based on the Harmonised Index of Consumer Prices (HICP) declined to 2.1% in May, while HICP inflation excluding food and energy fell marginally to 2.3%. Across the euro area, HICP inflation was higher than that in Malta due to the increase in energy inflation in the euro area. In May, inflation based on the Retail Price Index (RPI) decreased.

In April, the Consolidated Fund reported a surplus compared with a deficit recorded a year earlier, due to an increase in government revenue which outweighed an increase in government expenditure.

The annual rate of change of Maltese residents’ deposits decelerated when compared with March, while annual credit growth was unchanged.

The full ‘Economic Update’ is available on www.centralbankmalta.org/economic-update