Economic update 8/2017

Abstract

The Bank’s Business Conditions Index (BCI) signalled below average activity levels in July. Economic sentiment fell slightly during the month, as weaker sentiment among consumers, in industry and in construction offset improved confidence in the services and retail sectors. In June, retail sales grew moderately in annual terms, while industrial production decreased slightly. In contrast, tourism activity continued to grow at a fast pace. Labour market conditions remained favourable, as employment grew and the number of registered unemployed continued to decline. Price pressures remained moderate, with the annual rate of inflation based on the Harmonised Index of Consumer Prices (HICP) falling to 1.0% in June. Maltese residents’ deposits rose by 11.6% when compared with a year earlier, while growth in credit to residents eased marginally to 1.0%. As regards fiscal developments, the deficit on the cash-based Consolidated Fund narrowed in the first six months of 2017.