CBM Economic Update: The number of registered unemployed increased in March

Most of the data reported in this issue of the Economic Update refers to March 2020, which coincides with the first phase of COVID-19 cases in Malta and the intensification of the related containment measures. The impact of COVID-19 is also evident in the European Commission’s Economic Sentiment Indicator (ESI) and in the Bank’s Business Conditions Index (BCI) for April.

In April, the Central Bank of Malta’s BCI fell when compared with the previous month, suggesting notably weaker levels of economic activity with respect to the long-term average.

Similarly, the ESI declined sharply. Sentiment weakened in all sectors, with the largest falls recorded in the services and construction sectors.

In March, tourism activity contracted sharply as a result of the containment measures and the subsequent travel ban that was introduced on 21 March in response to COVID-19. The volume of retail trade also contracted, though by far less than tourism activity. Meanwhile, growth in industrial production slowed down.

The number of registered unemployed increased in March. However, the unemployment rate remained low from a historical perspective.

Consumer price inflation edged up in March, though still remaining at low levels, with the annual inflation rate based on the Harmonised Index of Consumer Prices rising to 1.2%. Similarly, inflation based on the Retail Price Index rose slightly to 1.1%.

The publication also looks at public finance developments and notes that the deficit on the cash-based Consolidated Fund widened significantly compared with a year earlier, partly reflecting the Government’s decision to defer the collection of a number of tax revenue components in view of COVID-19.

It also reports on recourse to the moratorium on loan repayments offered by domestic credit institutions by the end of March in response to COVID-19. The value of household and corporate loans subject to a moratorium at the end of the month was €487.0 million, equivalent to 4.5% of related outstanding loans.

The full Economic Update, which also reports on international trade and financial markets, is available here.