Overall business conditions improved marginally in December but continued to be far worse than normal, the Central Bank said in its Economic Update.
The bank’s Business Conditions Index (BCI) stood at -3.4 last month, improving from a revised value of -3.7 in November and slightly higher than the index value in May and June.
The BCI, which is calculated on a monthly basis, tracks current business conditions and can be used to compare business conditions at different times. A BCI of 0 indicates average business conditions.
December's reading was slightly higher than those recorded in May and June of -3.7 and -3.8 respectively. This improvement reflected a surge in economic sentiment – which although weaker on an annual basis – improved considerably in month-on-month terms.
This offset weaker conditions in the tourism sector, lower tax revenues and higher unemployment.
The European Commission’s Economic Sentiment Indicator also improved in December when compared with a month earlier. Confidence rose in the services sector and, to a more limited extent, among consumers, in industry and among retail firms. Notwithstanding these developments, sentiment was negative in all sectors.
In November, industrial production contracted after having risen marginally in the previous month, while the volume of retail trade fell at a slower pace in annual terms. The number of commercial and residential permits registered smaller declines when compared with October.
The number of registered unemployed fell in November with the unemployment rate rising marginally when compared with a month earlier. It, however, remained low both from a historical perspective and compared to other EU states in the euro area.
Inflation remained at a very low level in November with the annual inflation rate based on the Harmonised Index of Consumer Prices edging down to 0.2%. Inflation based on the Retail Price Index edged down marginally to 0.3%.
In November, the deficit on the cash-based consolidated fund widened when compared with a year earlier as primary government expenditure rose and government revenue fell.
The publication also reports on recourse to the moratorium on loan repayments offered by domestic credit institutions to residents of Malta in response to COVID-19.
The value of household and corporate loans subject to a moratorium at the end of November edged down further, to €924.4 million, equivalent to 7.9% of related outstanding loans, as some businesses and households resumed their loan repayments, signalling a recovery in income flows.
By the end of the same month, 516 facilities had been granted under the Malta Development Bank COVID-19 Guarantee Scheme, for working capital purposes, to businesses impacted by the pandemic, corresponding to total sanctioned amounts of €388.5 million.
The full Economic Update can be read here.