Economic update 2/2018

Abstract

In January, the Bank’s Business Conditions Index (BCI) was slightly lower than its level a month earlier, though it continued to suggest above-average conditions. Similarly economic sentiment, though remaining quite above its long-term average, fell during the month, reflecting weaker confidence across all sectors except amongst consumers, where it rose to the highest level on record. In December, retail sales and tourism activity grew at a strong pace in annual terms. Industrial production rose only marginally. Labour market conditions remained favourable, with the number of registered unemployed declining on an annual basis and Eurostat’s measure of the unemployment rate remaining at the lowest level on record. The annual rate of inflation based on the Harmonised Index of Consumer Prices (HICP) eased to 1.3% in December. The annual rate of change of Maltese residents’ deposits eased to 6.5% in December, while credit to residents increased by 2.7%. As regards fiscal developments, the cash-based Consolidated Fund registered a surplus in the first eleven months of 2017.