News - Economic Update 2020


Economic Update: Issue 3/2020

This issue of the Economic Update was compiled on the basis of information for the first two months of 2020, which precedes the reporting of COVID-19 cases in Malta.

In February, the Central Bank of Malta's Business Conditions Index (BCI) eased slightly when compared with the previous month, suggesting that economic conditions remained close to their long-term average.

The European Commission's Economic Sentiment Indicator also declined and remained below its level a year earlier. Similar to the BCI, it also stood below its long-term average. The decrease in sentiment during February was largely driven by weaker confidence in industry. Sentiment among consumers and retailers also eased, though very marginally. In contrast, confidence improved in the services and construction sectors.

In contrast with what is likely to be the situation emerging from data for the first full month after the appearance of COVID-19 in Malta, the current issue of the Economic Update reports that January experienced a significant increase in tourist arrivals and expenditure. Annual growth, however, moderated when compared with a month earlier. The index of industrial production and the volume of retail trade rose at a slower pace.

Labour market conditions remained favourable. The seasonally-adjusted unemployment rate stood at the low level of 3.4% in January, while the number of gainfully occupied continued to grow strongly, rising by 5.7% in the year to September 2019.

Consumer price inflation remained moderate. The annual inflation rate based on the Harmonised Index of Consumer Prices edged up to 1.4% in January from 1.3% in the previous month. Inflation as measured by the Retail Price Index, which is the more relevant measure of consumer price inflation for households, stood at 1.3%.

The publication also looks at public finance developments and notes that the deficit on the Consolidated Fund widened in January when compared with the same month in 2019. Government debt also rose over this period, mainly due to an increase in Treasury Bills outstanding.

The full Economic Update, which also reports on international trade and financial markets, is available here.

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