News - News Releases 2024
01/08/2024
Central Bank of Malta Business Dialogue Publication – Third edition of 2024
The latest business dialogue held between the Central Bank of Malta and non-financial corporations shows that in the second quarter of 2024, the net share of firms reporting better business conditions weakened when compared to the previous quarter but remained within the range estimated in the last few years. In the second quarter, this share stood at 36%, down from 47% in the first quarter of the year. The services sector remains buoyant, especially due to very strong tourism performance. Conversely, business conditions in the construction and real estate sector have continued to weaken. Moreover, conditions in the wholesale and retail sector have turned negative, which partly reflects relatively weaker profitability in this sector.
Looking ahead, a net 46% of firms expected an improvement in short-term business activity, higher than 39% in the preceding quarter. This share is similar to that reported in the last few years. The services sector retained the most positive expectations, likely reflecting the strong performance of tourism-related activities, while the wholesale and retail sector and the manufacturing sector had the least optimistic output among the four sectors assessed.
The net share of companies reporting higher input costs increased. Indeed, a net 54% of contacts reported that input prices have increased in recent months, up from 42% in the previous period.
The net share of firms reporting higher selling prices stood at 42% in the second quarter of 2024, 8 percentage points higher than in the previous quarter. These increases are, however, much lower than those reported in the last few years.
The net share of firms planning to invest more dropped to 30%, from 36% in the previous quarter, while the net share of firms planning to increase their staff complement decreased by just 1 percentage point, to a net 41%. Hiring intentions are, however, lower than those reported last year. Companies have continued to express concerns about labour and skill shortages, and pressures to increase wages.
This publication also incorporates a box on insights about the impact of teleworking arrangements on firms' demand for office space. The replies collected indicate that while teleworking has been adopted to some extent, it has not led to a substantial reduction in office space demand for most firms. This is primarily due to the specific nature of many roles that require on-site presence as well as companies' reluctance to offer such work arrangements. However, the real estate market has felt the impact more severely and reported an oversupply of commercial office spaces.
The full publication is available here. The Business Dialogue survey can also be accessed in a new and interactive way through its dedicated dashboard.
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