CBM publishes its third issue of its Quarterly Review for 2023
The Maltese economy in the first quarter of 2023 expanded at a slower pace compared to the previous quarter, the Central Bank said in a statement Wednesday.
When adjusting for imports, external trade was the main driver of growth, as the contribution of domestic demand though positive, was small. The Bank’s estimate of the output gap remained positive but narrowed, indicating that the degree of over-utilisation of the economy’s productive capacity has eased somewhat.
The Bank’s Business Conditions Index stood slightly above its historical average. The European Commission’s Economic Sentiment Indicator rose above its long-term average.
Developments in the labour market remained positive, the CBM said.
Consumer price pressures eased somewhat, but inflation remained high from a historical perspective.
The general government deficit-to-GDP ratio fell while the debt-to-GDP ratio edged up compared with the fourth quarter of 2022.
GDP and employment growth in Malta were higher compared with the euro area average, while the unemployment rate was lower. However, HICP inflation was higher. While Malta’s deficit-to-GDP ratio was higher than the euro area average, its debt-to-GDP ratio was lower.
In light of persistent inflationary pressures, the ECB raised its key interest rates again in February and in March. Additional increases were announced in May, June, and July.
From March 2023, and until the end of June, the Eurosystem began to reinvest only part of maturing securities under the Asset Purchase Programme (APP). Such reinvestments ended as of July 2023. These decisions are reflected in a decrease in the value of securities under this programme.
The Governing Council reiterated its intention to continue reinvesting the principal payments from maturing securities purchased under the pandemic emergency purchase programme (PEPP) until at least the end of 2024.