Economic update 7/2018

Abstract

In June, the Bank’s Business Conditions Index (BCI) remained unchanged over the previous month, and continued to suggest above-average economic conditions. Economic sentiment edged down slightly, as lower confidence in the construction, services and retail sectors offset higher sentiment within industry and among consumers. In May, tourism activity continued to grow at a strong pace in annual terms, while industrial production and retail trade contracted. Labour market conditions remained favourable, with the number of registered unemployed declining on an annual basis and Eurostat’s measure of the unemployment rate falling to a new record low. The annual inflation rate based on the Harmonised Index of Consumer Prices (HICP) picked up in May, reaching 1.7%. In May, the annual rate of change of Maltese residents’ deposits and the annual growth in credit to residents accelerated, standing at 7.7% and 2.4% respectively. As regards fiscal developments, the cash-based Consolidated Fund recorded a surplus, in contrast to a deficit in May 2017.