Confidence has fallen “sharply” in the services and construction sectors and among consumers as the number of new COVID-19 cases continue to spike, the Central Bank of Malta said on Thursday. 

In its monthly economic update, the CBM said that, in October, its Business Conditions Index was unchanged when compared with the previous month, stabilising above the low levels estimated around June.

Despite this, the CBM said the index continued to signal “very low levels” of economic activity. 

“After recovering somewhat in September, the European Commission’s Economic Sentiment Indicator fell again in October, standing slightly above its August level, yet well below the level recorded before the onset of COVID-19. 

The latest deterioration occurred amid a resurgence of COVID-19 cases. 

The lack of confidence in the services sector, construction sector and among consumers offsets improved sentiment in industry and among retailers. 

Sentiment remained negative in all sectors.

On the annual inflation rate based on the Harmonised Index of Consumer Prices, the CBM said this eased to 0.5% in September, from 0.7% in August, while inflation based on the Retail Price Index edged down to 0.2% from 0.4% over the same period. 

Maltese residents’ deposits grew at a slightly slower annual rate of 5.8% over the year to September, while annual growth in credit to Maltese residents rose to 11.2%.

In September, the deficit on the cash-based consolidated fund widened when compared with a year earlier, reflecting the impact on revenue from lower economic activity due to the global spread of COVID-19, and the impact of ongoing government support measures to mitigate the economic effects of the pandemic, the CBM said.