05/08/2022

Central Bank of Malta Business Dialogue Publication – Third Edition of 2022

Meetings held between the Central Bank of Malta and non-financial corporations during the second quarter of 2022 show that:

• Overall business conditions improved.
• Short-term expectations about business activity are less optimistic than before.
• Investment plans have largely remained on track.
• Firms plan additional recruitment but continue to express concerns about labour shortages and wage pressures.
• Cost pressures have remained elevated and are being reflected in higher selling prices.

In the second quarter of 2022, business conditions improved. This follows two quarters of softening. Indeed, the net percentage of firms reporting an improvement in activity over the three months preceding the interview increased from 31% in the first quarter of 2022 to 52% in the second. During the quarter under review, 64% of firms contacted reported higher activity while 13% reported a decrease.

Looking ahead, expectations about business conditions are less uncertain but also less optimistic compared to the previous round of contacts. In fact, 48% of the firms interviewed reported that they expect business activity to increase over the next three months while 17% anticipated a deterioration. Thus, a net share of 31% expected an amelioration in near term business activity, down from 39% in the previous quarter.

Firms continue to be adversely affected by supply-chain disruptions and cost pressures, which have remained elevated in the second quarter of the year. Insights gathered from the contacts during the second quarter suggest that most companies were impacted by the war in Ukraine, mostly by higher import prices. Indeed, a net 77% of contacts reported that input prices have increased. In part due to elevated cost pressures, a net 61% of firms interviewed reported an increase in their selling prices. This was the highest net balance since the survey began.

In the second quarter of 2022, 92% of respondents reported to have continued with their investment plans as scheduled, while 5% reported postponement. The share of firms reporting that no investment was planned decreased to 3%, compared to 18% in the previous quarter.

In view of positive business conditions, a net 42% of firms plan to increase their staff complement, up from 35% in the previous quarter. This share is highest among services firms. Businesses have continued to express concerns about labour shortages and pressures to increase wages.

The full publication is available here.

Back to Archive