Economic activity in Malta moderated but is broadly in line with its historic average. On the one hand, the Bank’s Business Conditions Index indicates that in June, annual growth in business activity stood slightly below its long-term average, but this was mainly driven by the profile of tax revenue which was subject to timing issues. Although manufacturing and retail trade moderated in May, as did services production in April, in each case growth stood above the respective historical average. Meanwhile, the tourism sector in May continued to record strong growth.

Consumer sentiment has increased markedly in June and stood around historic highs.
Moreover, unemployment expectations have declined below their historic average.

Overall, supply and demand conditions in the property market remain relatively strong. In May, approved permits for residential buildings increased compared with the same month last year. In June, however, approved commercial permits were lower compared with the same month a year earlier. On the demand side, the number of residential promise-of-sale agreements decreased in June compared with a year earlier while the number of final deeds of sale increased.

In June, the unemployment rate remained unchanged from May, at 3.5%, but stood above the rate recorded in the same month a year earlier.

Malta’s inflation rate fell in June and stood well below that in the euro area. The annual inflation rate based on the Harmonised Index of Consumer Prices (HICP) declined from 2.1% in May to 2.0% in June, while HICP inflation excluding food and energy stood at 2.2%. Across the euro area, HICP inflation was higher than in Malta due to high energy inflation. HICP inflation excluding food and energy in Malta was also below that in the euro area. According to the Retail Price Index (RPI), inflation in June decreased to 2.5%.

In May, the Consolidated Fund reported a deficit compared with a surplus a year earlier, due to the timing of receipt of income taxes and a surge in capital spending.

The annual rate of change of Maltese residents’ deposits increased while annual credit growth remained broadly unchanged, compared with April.

The full Economic Update is available here.