Economic conditions in June indicate that the slowdown triggered by the COVID-19 outbreak might have reached its lowest point amid modest signs of recovery in certain sectors such as retail, the Central Bank said.

As expected, public finances have taken a toll with the government recording a deficit of €142.8 million in May when compared to the corresponding month of 2019.

This was due to a significant rise in expenditure on economic stimulus packages and the wage supplement measures at a time when the government’s revenue took a hit with the tourism industry at a complete standstill.

These conclusions were reached through the Economic Update, the Central Bank’s periodic analysis.  Most of the data covers May which coincided with the easing of certain COVID-19 restrictions such as the reopening of some shops and the resumption of certain services.

In June, the Business Conditions Index, - which measures the general state of the economy - fell slightly when compared with the previous month, suggesting that economic conditions may have reached their lowest ebb though they remained significantly below their long-term average. The level was comparable to that recorded during the 2009 global crisis.

The economic update also gauged the situation through the Economic Sentiment Indicator which was virtually unchanged when compared to May and remained below the historical average.

Weaker confidence in services and industry was largely offset by improved sentiment in the retail sector among consumers which returned above its historic average, the Central Bank said. A marginal improvement was recorded in the construction industry.

In May, the volume of retail trade and industrial production fell in annual terms, although the rate of contraction was smaller when compared to that in April.

Annual growth in development permits for both commercial and residential purposes remained negative, though the amount of residential permits remained above the historical average.

As for unemployment, the Central Bank said the number of registered unemployed and the unemployment rate edged up further, but remained relatively low from a historical perspective.

According to the update, consumer prices eased again in May as the annual inflation rate based on the Harmonised Index of Consumer Prices declined to 0.9%, from 1.1% in April, while inflation based on the Retail Price Index fell to 0.7%, from 0.8% in the previous month.

The Central Bank noted that the outbreak continued to have a lasting impact on public finances. While in May 2019 government recorded a surplus of €76.6 million, in May 2020 it registered a deficit of €66.3 million