30/03/2023

Central Bank of Malta issues March Economic Update

The Bank's Business Conditions Index indicates that in February, annual growth in business activity remained slightly above its long-term average, estimated since January 2000.

The European Commission’s confidence surveys show that economic sentiment in Malta edged up in February when compared with a month earlier, and stood above its long-term average, which is estimated since November 2002. When compared with the previous month, the improvement was largely driven by the construction and services sectors. By contrast, sentiment turned negative in the retail sector.

Additional survey information shows that compared to January 2023, price expectations stood around their year-ago level among consumers, as well as in industry and services, with larger deviations for the remaining two sectors. In particular, they stood firmly above their year-ago level in the construction sector, while standing significantly lower in the retail sector.

The European Commission's Uncertainty Indicator for Malta decreased in February, indicating lower uncertainty. Uncertainty fell mostly in industry.

In January, growth in industrial production and the volume of retail trade remained strong in annual terms but was slower when compared with December 2022. The unemployment rate stood at 3.0% in January, marginally higher than the rate of 2.9% registered in the previous month, and unchanged from that registered in January 2022.

Commercial building and residential permits decreased in January relative to their year-ago levels but exceeded those issued in December. In February, the number of promise-of-sale agreements rose on a year-on-year basis while the number of final deeds of sale fell.

The annual inflation rate based on the Harmonised Index of Consumer Prices (HICP) stood at 7.0% in February, up from 6.8% in the previous month. Inflation based on the Retail Price Index (RPI) also increased, standing at 7.1% in February, from 6.9% in January.

In January, the deficit on the Consolidated Fund widened when compared with a year earlier, as government expenditure rose while revenue remained broadly stable.

Annual growth in Maltese residents' deposits expanded at a slower rate of 3.9% in January. Meanwhile, annual growth in credit to Maltese residents also moderated to 7.3%.

The full Economic Update is available here.

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