Central Bank of Malta launches new publication

The Central Bank of Malta is launching a new quarterly publication: the CBM Business Dialogue.

The publication summarises results obtained from meetings conducted by the Bank’s economists with top-level representatives of corporations and institutions. These discussions take the form of a brief interview rather than a survey. This provides respondents with the opportunity to raise any topic they consider relevant for their organisation and allows the Bank to collect information that would otherwise be very difficult to obtain.

“This exercise aims to supplement official statistics – which are often published with a lag – with more timely and enhanced insights into the main issues faced by firms. Over the last five years the Bank has maintained regular contact with major non‑financial corporations, authorities, and other institutions in Malta. It did this to obtain useful real-time insights on economic performance, expectations for business activity, employment, and prices. But the information was kept for the Bank’s own use. Now we intend to pass on this information – in aggregate form – to the public,” according to the Bank’s Governor Prof. Edward Scicluna.

Information gathered between January and March 2021 suggests a third of companies contacted during the first quarter of 2021 reported positive developments, with this share being 6% higher than that in the previous quarter. The other two-thirds continued to assess current business conditions as weak and well below pre-COVID-19 levels.

During this period, 43% of contacts expected business activity to remain unchanged over the next few months. Meanwhile, 27% of firms contacted expected their business activity to improve shortly, while 14% expected some worsening. The share of respondents, reporting that business prospects remain uncertain, halved when compared to the final quarter of 2020, but remained significant at 16%.

Over three quarters of contacts reported that both input and selling prices had remained unchanged in the previous few months. Around 20% of the businesses contacted said that input costs increased and 17% have raised their selling prices in response.

The majority of firms contacted between January and March 2021 reported that their investment plans remain on track. Indeed, investment plans for 69% of firms contacted have continued as scheduled, with a further 13% reporting postponement. The share of respondents reporting cancellation of investments was small.

The employment situation remained broadly stable among the pool of firms interviewed in the first quarter of 2021, with 81% of them reporting unchanged employment plans. Most firms continue to benefit from the Government’s Wage Supplement Scheme, which was widely seen as essential for maintaining current staff levels. The rest were almost evenly divided between those revising up their employment plans and those that had revised them down. In some cases, this reflected voluntary redundancies – as staff moved to sectors perceived to be more resilient and these were not replaced.

The full publication is available here.