The Central Bank of Malta issues a February Economic Update
The Bank’s Index of Business Conditions shows that in January, annual growth in business activity remained well above its historical average although it is gradually normalizing as many economic variables are reaching pre-pandemic levels.
The European Commission’s Confidence Survey shows that economic sentiment in Malta increased in January – compared to a month earlier. It remained well above the level of a year ago and also marginally exceeded its long-term average. Compared to December, confidence in services, construction and industry improved but declined in the retail and consumer sectors.
The European Commission’s Uncertainty Indicator for Malta has declined compared to December. Lower uncertainty has been driven largely by developments in industry and, to a lesser extent, in the construction and retail sectors. Consumers have continued to report that they are able to predict the future financial situation of their home with relative ease. In contrast, uncertainty in the services sector has increased.
In December, industrial production fell on an annual basis for the fifth consecutive month. Meanwhile, the volume of retail trade continued to rise but at a slower pace than before.
The unemployment rate remained the same at 3.4% compared to November – well below the pre-pandemic level.
In January, the number of final deeds of sale for residential property increased while the number of sale pledge agreements decreased on an annual basis. Commercial permits increased slightly in December, compared to a year ago, while residential permits fell.
The annual inflation rate based on the Harmonized Index of Consumer Prices (HICP) and that based on the Retail Price Index (RPI) both rose to 2.6% from 2.4% in November.
The Economic Update also includes data on the recourse to the moratorium on the repayment of loans offered by domestic credit institutions to residents of Malta in response to COVID-19. Corporate loans subject to a moratorium remained very limited at the end of the year. At € 14.1 million, this was equivalent to only 0.1% of the related outstanding loans in December. This reflects a recovery in revenue streams and the expiry of the moratorium period for most beneficiaries. By the end of the year, 654 working capital and loan repayment facilities had been granted to businesses affected by the pandemic under the COVID-19 Guarantee Scheme of the Malta Development Bank, which correspond to total sanctioned amounts of € 505.9 million, or 65.0% of the target size of the scheme.
The whole Economic Update is available here.