Central Bank review shows Maltese economy starts year in stuttering mode
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Malta’s economic performances continued to stutter in the first months of the year according to a review carried out by the Central Bank of Malta.
While the Covid-19 pandemic continues to wreck havoc among economies, Euro zone business activity unexpectedly grew this month, a preliminary survey showed, but with much of Europe suffering a third wave of coronavirus infections and renewed lockdown measures, that may not last through April.
In January, development permits for commercial buildings declined by 7.1% in annual terms, after falling by 10.7% in December. Moreover, residential permits contracted by 24.3% in annual terms. Despite these declines, commercial and residential permits remain slightly above their long-term monthly average.
Consumption remained subdued, with the volume of retail trade, which is a short-term indicator of final domestic demand, falling by 3.4% on an annual basis, after rising by 2.2% in December.
In January, annual growth in the index of industrial production – which is a measure of economic activity in the manufacturing and energy sectors – continued to decline. The index fell by 6.0% in annual terms, following a contraction of 4.8% in December The recent decline in industrial production was broad-based across sectors. However, the largest decreases were recorded among firms specialising in the repair and installation of machinery and equipment, wood products and fabricated metals. Other strong declines were recorded among firms within the motor vehicles, trailers and semi-trailers section, the food and chemicals sectors, as well as the ‘other manufacturing’ sector – which includes firms involved in the production of medical and dental instruments, toys and related products.
These were followed by smaller falls in the production of beverages, printing and reproduction of recorded media as well as among firms that produce rubber and plastic products. These declines offset higher manufacturing output among firms producing pharmaceutical goods as well as those specialising in computer, electronic and optical goods. Meanwhile, production in the energy sector decreased.
Latest data from European counterparts shows that eurozone factories ramped up output at the fastest monthly pace in over 23 years, countering a continuing slowdown in the currency bloc’s dominant services industry, which is far more vulnerable to lockdowns and the region’s slow vaccine rollout.
The tourism sector continued to be severely impacted by travel-related restrictions. The number of inbound tourists stood at 13,806 in January, a 90.7% drop compared with the same month a year earlier. Guest nights declined by 79.8%, with collective accommodation registering the sharpest decline in absolute terms. Total expenditure fell by 87.6% over the corresponding period in 2019.
Customs data show that the merchandise trade deficit stood at €102.1 million in January, down from €280.8 million a year earlier. The smaller deficit reflected a €256.1 million decline in imports which outweighed a €77.3 million fall in exports. Lower imports continued to be observed across most broad economic categories; however, the decline in imports was mainly on account of a significantly lower fuel import bill and fewer registrations of aircraft.
Imports of machinery and mechanical appliances, pharmaceutical products, vehicles, plastic, and knitted clothing also fell, although these decreases were much smaller. These declines more than outweighed a small increase in imports of organic chemicals.
The decline in exports was almost entirely driven by a significant fall in re-exports of mineral fuel and related products.
