Malta’s economic situation has slightly improved in September when compared with the previous month, the Central Bank of Malta said in a statement on Wednesday.
The data reported in its Economic Update refer to August 2020 when restrictive measures related to coronavirus were lifted. Mitigation measures were re-introduced in mid-August when the number of infections started to surge and Malta entered its second wave. The measures affected predominantly the entertainment sector.
In September, the Central Bank of Malta’s Business Conditions Index improved slightly when compared with the previous month, indicating that economic conditions are bottoming out. However, the Index continues to signal low levels of economic activity.
The Economic Sentiment Indicator edged up when compared with the previous month, but remained well below pre-pandemic levels. The increase in this indicator mostly reflects improved sentiment in the services sector and in industry and, to a lesser extent, in the construction sector and among consumers. By contrast, confidence fell among retailers. Sentiment remained negative in all sectors, the bank reported.
In August, industrial production and the volume of retail trade fell in annual terms, though the latter declined at a slower rate when compared with July. The number of development permits for commercial purposes were significantly below their level in August 2019. By contrast, the number of residential development permits issued in August rose for the first time in seven months.
The number of registered unemployed and the unemployment rate fell when compared with the preceding month, with the latter remaining relatively low from a historical perspective.
Inflation remained low in August and eased further in September. The annual inflation rate based on the Harmonised Index of Consumer Prices closed the third quarter at 0.5%, while inflation based on the Retail Price Index edged down to 0.2%.
Compared to the surplus observed a year earlier, the cash-based Consolidated Fund recorded a deficit in August, reflecting the impact on revenue from lower economic activity due to the global spread of COVID-19 and ongoing government support measures to mitigate the economic effects of the pandemic.
The publication also reports on recourse to the moratorium on loan repayments offered by domestic credit institutions to residents of Malta in response to the effects brought about by the pandemic.
The value of household and corporate loans subject to a moratorium at the end of August edged up to €1.9 billion, equivalent to 16.9% of related outstanding loans.
The Government launched the Malta Development Bank COVID-19 Guarantee Scheme, to guarantee new loans for working capital granted by credit institutions to businesses impacted by the pandemic in April. As at end August, 412 facilities – corresponding to total sanctioned amounts of €285.1 million – were approved.