Economic update 9/2017

Abstract

The Bank’s Business Conditions Index (BCI) signalled a slight improvement in activity levels in August over the previous month. Economic sentiment also rose during the month, as confidence improved in all sectors. In July, retail sales grew moderately in annual terms, while tourism activity continued to grow at a fast pace. In contrast industrial production declined in annual terms. Labour market conditions remained favourable, with the number of registered unemployed declining on an annual basis and Eurostat’s measure of the unemployment rate remaining low from a historical perspective. Price pressures remained moderate, with the annual rate of inflation based on the Harmonised Index of Consumer Prices (HICP) at 1.2% in July. Maltese residents’ deposits rose by 13.4% when compared with a year earlier, while growth in credit to residents accelerated to 2.0%. As regards fiscal developments, the deficit on the cash-based Consolidated Fund narrowed in the first seven months of 2017.