Maltese economy shows resilience amidst slower growth

CBM publishes its fourth issue of its Quarterly Review

The Maltese economy expanded at a slower pace compared to the previous quarter. When adjusting for imports, domestic demand had a neutral impact on gross domestic product (GDP) growth, while exports had a positive effect. 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 further.

The Bank’s Business Conditions Index stood slightly above its historical average. The European Commission’s Economic Sentiment Indicator remained above its long-term average.

Developments in the labour market remained favourable.

Consumer price pressures eased somewhat, but inflation remained high from a historical perspective.

The general government deficit-to-GDP ratio and the debt-to-GDP ratio fell when compared with the first quarter of 2023. While Malta’s debt-to-GDP ratio was lower than the euro area average, its deficit-to-GDP ratio was higher.

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 as energy inflation stood negative in the euro area.

In light of persistent inflationary pressures, the European Central Bank raised its key interest rates again in May and June. Additional increases were announced in July and September. In July, the Governing Council also decided to set the remuneration of minimum reserves at 0%.

The fourth issue of the Quarterly Review for 2023 is available on the Bank’s website.

For more recent indicators consult the Economic Update.