Economic update March 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. Tourism indicators point to further expansion in January 2016. 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), edged up to 1.0% in February. Maltese residents’ deposits continued to expand at a rapid annual rate in January, while the annual rate of growth of credit to residents edged up to 5.9%. As regards fiscal developments, the general government deficit narrowed substantially in the third quarter of 2015, while the deficit on the Consolidated Fund also decreased during the first eleven months of the year. In January, the Consolidated Fund deficit widened on the same month a year earlier, mainly due to the timing of grant receipts. On the external side, the surplus on the current account of the balance of payments increased in the fourth quarter of 2015.