Economic update 4/2018

Abstract

In March, the Bank’s Business Conditions Index (BCI) was slightly lower than a month earlier, while continuing to suggest above-average conditions. Economic sentiment fell, reflecting weaker sentiment across all sectors, with the exception of services. In February, retail sales and tourism activity grew at a strong pace in annual terms, while industrial production contracted further. 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 historically new low. The annual rate of inflation based on the Harmonised Index of Consumer Prices (HICP) rose slightly to 1.3% in February. Meanwhile, the annual rate of change of Maltese residents’ deposits decelerated to 5.9%, while that of credit to residents eased to 0.9%. As regards fiscal developments, the cash-based Consolidated Fund showed a smaller surplus compared with February 2017.