19/11/2024 14:25:00

Central Bank of Malta publishes its Quarterly Review on economic developments for the second quarter of 2024

During the second quarter of 2024, the Maltese economy expanded at a slower pace when compared to the previous one, although the rate of expansion remained among the highest in the euro area. Growth was mainly driven by net exports, as the contribution of domestic demand, while still positive, was smaller. When adjusting for imports, exports remained the main driver of GDP growth.

The Bank's estimate of the output gap indicates that the degree of over-utilisation of the economy's productive capacity eased slightly when compared with the previous quarter.

The Bank's Business Conditions Index edged down in the second quarter of 2024, to stand in line with its historical average. The European Commission's Economic Sentiment Indicator rose but remained below its long-term average.

Developments in the labour market remained positive. The unemployment rate remained low from a historical perspective and well below that in the euro area. Conditions in the labour market remained tight in relations to recent outcomes, despite a slight decline.

Consumer price pressures eased further during the second quarter of 2024. Annual inflation, as measured by the HICP, fell to 2.2% in June, while the measure excluding energy and food dipped to 2.0%.

In the second quarter of 2024, the general government deficit-to-GDP ratio narrowed when compared to the preceding quarter, while the general government debt-to-GDP ratio declined. As the fiscal deficit narrowed, it converged to the euro area average. The debt-to-GDP ratio remained well below that in the euro area.

Malta's GDP growth remained significantly faster than that in the euro area, which grew marginally. According to the Labour Force Survey, employment growth in Malta was higher than the euro area average while the unemployment rate was lower. Overall, both headline HICP inflation, and that excluding energy and food, was lower than the euro area average, reflecting a lower contribution from services inflation.

The ECB's Governing Council lowered the three key ECB interest rates by 25 basis points in June. Additional cuts were announced in September and October based on updated information about the inflation outlook, the dynamics of underlying inflation and the strength of monetary transmission. As a result, the deposit facility rate, the rate through which the Governing Council steers the monetary policy stance, was lowered to 3.75% in June and further to 3.25% by October.

The fourth issue of the Quarterly Review for 2024 is available on the Bank's website.

For more recent indicators kindly consult the Economic Update.

Back to Archive