Economic update April 2016

Abstract

Economic activity in Malta continued to expand robustly in the fourth quarter of 2015, with real gross domestic product (GDP) increasing by 5.7% on a year earlier. Growth was driven by domestic demand. Hard data point to further expansion in tourism at the beginning of 2016, but weakness in manufacturing. Buoyant economic activity is being reflected in the labour market, with employment expanding and the unemployment rate remaining at historically low levels. Price pressures were moderate. The annual rate of inflation, based on the Harmonised Index of Consumer Prices (HICP) was unchanged at 1.0% in March. Maltese residents’ deposits continued to expand at a rapid annual rate in February, while the annual rate of growth of credit to residents eased slightly to 5.7%. As regards fiscal developments, the general government deficit narrowed substantially in 2015. On the other hand, the deficit on the Consolidated Fund widened. In the first two months of 2016 the Consolidated Fund showed a deficit compared with a surplus a year earlier, mainly due to lower grant receipts. On the external side, the surplus on the current account of the balance of payments increased in the fourth quarter of 2015.