CBM publishes its Quarterly Review on economic developments in the first quarter of 2024
During the first quarter of 2024, the Maltese economy expanded at a marginally faster pace when compared to the previous one. When adjusting for imports, exports remained the main contributor to economic growth, although domestic demand also had a positive impact. The Bank’s estimate of the output gap indicates that the degree of over-utilisation of the economy’s productive capacity was less than that estimated in the previous quarter.
The Bank’s Business Conditions Index edged down in the first quarter of 2024, but remained slightly above its historical average. Meanwhile, the European Commission’s Economic Sentiment fell slightly below its respective long-term average.
Developments in the labour market remained positive. The unemployment rate remained close to its historical low and well below that in the euro area, with conditions in the labour market remaining tight.
Consumer price pressures eased further during the first three months of 2024. Annual inflation, as measured by the HICP, fell to 2.7% in March, while the measure excluding energy, food and tobacco dipped to 2.2%.
Whereas the general government deficit-to-GDP ratio narrowed when compared with the fourth quarter of 2023, the debt-to-GDP ratio rose marginally. Malta’s debt ratio remained well below the euro area average, though its deficit ratio stood above it.
Malta’s GDP rose on the same quarter a year earlier, while that in the euro area grew only marginally. According to the Labour Force Survey, employment growth in Malta was higher than the euro average while the unemployment rate was lower. While overall HICP inflation was higher than the euro area average, reflecting negative energy inflation in the euro area, HICP excluding energy, food and tobacco was lower than in the euro area.
The ECB’s Governing Council kept the three key ECB interest rates unchanged during the first quarter of 2024, but reduced them by 25 basis points in June in view of a marked improvement in the inflation outlook, an easing of underlying inflation, and restrictive financing conditions.
The third issue of the Quarterly Review for 2024 is available on the Bank’s website.