Confidence up, uncertainty down according to Central Bank of Malta’s latest economic update

The Central Bank of Malta’s (CBM) Business Conditions Index indicates that in January, annual growth in business activity stood slightly above its long-term average, estimated since January 2000.

The information comes to light through the CBM’s ‘February Economic Update,’ which provides data on economic markers for the month of January.

The European Commission’s confidence surveys show that economic sentiment in Malta edged up in January when compared with a month earlier, and stood above its long-term average, which is estimated since November 2002. When compared with the previous month, the CBM noted, the improvement was largely driven by industry, even though sentiment in this sector remained negative.

Additional survey information shows that compared to December 2022, price expectations decreased in the retail sector, but rose across the remaining sectors.

The European Commission’s Uncertainty Indicator for Malta decreased in January, signalling lower uncertainty. Uncertainty fell mostly in the retail sector and in industry, with smaller decreases recorded in the construction and in the services sectors. By contrast, uncertainty among consumers edged up slightly.

Indeed, while inflation is increasing at a slower rate, it is still higher than more stable times and much higher than the EU’s aim for an annual inflation rate of two per cent.

The CBM noted that the annual inflation rate based on the Harmonised Index of Consumer Prices (HICP) stood at 6.8 per cent in January, down from 7.3 per cent in the previous month. Inflation based on the Retail Price Index (RPI) also decreased, standing at 6.9 per cent in January, down from 7.4 per cent in December.

In December, both industrial production and the volume of retail trade rose in annual terms.

The unemployment rate stood at 3.2 per cent in December, unchanged from the previous month, and marginally higher than a year earlier.

Commercial building and residential permits decreased in December relative to their year-ago levels. In January, the number of promise-of-sale agreements rose on a year-on-year basis while the number of final deeds of sale fell.

Annual growth in residents’ deposits increased at a slower rate of four per cent in December. Meanwhile, annual growth in credit to Maltese residents also slowed down, to 7.6 per cent.

By December, 622 facilities were approved and still outstanding in terms of the Malta Development Bank (MDB) COVID-19 Guarantee Scheme, corresponding to total sanctioned amounts of €482.6 million.

Meanwhile, three loan facilities were approved under a new MDB Subsidised Loans Scheme aimed at importers and wholesalers of wheat and animal feeds.

The full Economic Update is available here.