Economic growth prospects remain dim according to the latest Sentiment Indicator surveyed by the European Commission and published by the Central Bank of Malta, possibly reflecting the rise in COVID-19 infections and the announcement of additional containment measures in October.
This survey largely reflected the CBM’s own indicators, with the Business Conditions Index remaining unchanged when compared with the previous month. Although recent readings are higher than the low estimate for June, the Index continues to signal low levels of economic activity.
Lower sentiment was largely driven by a significant decline in confidence in the services sector and, to a more limited extent, in the construction sector and among consumers. By contrast, sentiment improved in industry and among retailers. Nonetheless, confidence remained negative in all sectors.
Consumer confidence also edged down in October, and now stands at -9.4, marginally below the -9.1 recorded in September, yet still above its long-term average of -11.2. The recent decline in sentiment largely reflected a weaker assessment of the financial situation over the last 12 months.
Consumers’ expectations of major purchases, as well as expectations of the general economic situation over subsequent months, eased marginally.
Development permits remain in positive territory
In its monthly report, the CBM noted that industrial production and the volume of retail trade fell in annual terms. The number of development permits for commercial purposes stood above their level a year earlier. By contrast, the number of residential development permits contracted, following an increase in the previous month.
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 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%.
Unemployment increases by 1,668 in a year
Jobsplus data show that the number of persons on the unemployment register stood at 3,385 in September, down from 3,672 in August but higher
than the 1,668 registered a year earlier. The seasonally-adjusted unemployment rate stood at 4.0% in September, marginally lower than the 4.1% registered in the previous month, but still higher than the rate of 3.6%
registered in the same month of the preceding year.
Loan moratoria on 15.6% of outstanding loans
The publication also reports on recourse to the moratorium on loan repayments offered by domestic credit institutions to residents of Malta in response to COVID-19. The value of household and corporate loans subject to a moratorium at the end of September fell to €1.8 billion, equivalent to 15.6% of related outstanding loans, as some businesses outside the accommodation sector as well as households resumed their loan repayments.
In April, 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. As at end September, 453 facilities - corresponding to total sanctioned amounts of €343.7 million - were approved.