28/03/2024 09:27:00

Central Bank of Malta issues March Economic Update

Annual growth in business activity remains below its long-term average

The Bank's Business Conditions Index indicates that in February, annual growth in business activity marginally decreased and remained below its long-term average.

The European Commission's economic confidence indicator fell in February and was also below its long-term average. Employment expectations also decreased below their long-run average.

Price expectations decreased across almost all sectors, with the strongest declines recorded among consumers and in the construction sector. By contrast, price expectations in industry stood less negative compared with a month earlier.

Developments in activity indicators were mixed, as industrial production contracted on a year earlier, while retail trade rose marginally in annual terms. Unemployment remained low from a historical perspective.

Residential permits were lower in January compared with their year-ago level. In February, both the number of promise-of-sale agreements and the number of final deeds rose on a year-on-year basis.

In January, Maltese residents' deposits, forming part of the broad monetary aggregate M3, rose above their year ago level for the second consecutive time, following a few months of year-on-year declines in the second half of 2023. This increase was mostly driven by balances belonging to households. Meanwhile, annual growth in credit to Maltese residents was unchanged from a month earlier.

In February, the annual inflation rate based on the Harmonised Index of Consumer Prices (HICP) fell to 3.0%, while HICP excluding energy and food, remained below the euro area average. Meanwhile, a month-on-month decline in food prices during the month led to inflation, according to the Retail Price Index (RPI), declining to 2.3%, the lowest rate observed since September 2021.

In January, the Consolidated Fund recorded a smaller deficit compared to a year earlier.

The full Economic Update is available here.

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