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News - Economic Update 2020

24/04/2020

Economic Update: Issue 4/2020

This issue of the Economic Update was largely compiled on the basis of information for February, and therefore this does not yet reflect activity following the first cases of COVID-19 in Malta. However, business conditions and sentiment Indicators for March already start to reflect some of the impact of the pandemic on the economy.

In March, the Central Bank of Malta's Business Conditions Index (BCI) fell when compared with the previous month, and continued to suggest that the economy was operating below, but close to its long-term average.

The European Commission's Economic Sentiment Indicator (ESI) for March also declined and remained below its level a year earlier. Similar to the BCI, it also stood below its long-term average. Sentiment weakened in all sectors, except construction, with the retail and services sectors recording the largest losses. The ESI partly reflected responses given after the emergence of COVID-19 in Malta.

In February, annual growth in the number of tourist arrivals remained strong and close to that recorded a month earlier.  Nights stayed and expenditure by tourists rose at a faster pace.  The volume of retail trade also grew at a quicker rate, while growth in industrial production slowed down, but remained robust.

Conditions in the labour market remained favourable. The seasonally-adjusted unemployment rate stood at 3.3% in February, while the number of gainfully occupied continued to grow strongly, rising by 5.7% in the year to October 2019.

Consumer price inflation eased in February, with the annual inflation rate based on the Harmonised Index of Consumer Prices standing at 1.1% and the rate measured by the Retail Price Index at 1.0%.

The publication also looks at public finance developments and notes that the deficit on the cash-based Consolidated Fund widened in February when compared with the same month in 2019. Government debt also rose over this period, mainly due to new issues of Malta Government Stocks as well as a rise in Treasury Bills outstanding.

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

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