Business conditions during the COVID-19 outbreak are nearly as bad as “the great recession” of 2009, the Central Bank said on Friday.
In an economic update, the bank said that Malta’s Business Conditions Index was beginning to signal significantly low levels of economic activity.
The conditions of business, the bank said, are now comparable to readings during the great recession in early 2009.
Triggered by a combination of financial developments, the 2009 crisis has been described by the International Monetary Fund as the most severe economic and financial meltdown since the great depression of the 1930s.
Hundreds of restaurants and hairdressers opened their doors on Friday as the government begins to relax economic restrictions imposed to contain the coronavirus spread.
Meanwhile, the Central Bank report says that current situation in Malta, sparked by the COVID-19 outbreak has seen strongly negative out-turns with lower tourist arrivals, economic sentiment and government revenues, as well as higher unemployment.
On the other hand, these were offset somewhat by growth in industrial production.
“As the exceptional economic environment triggered by COVID-19 becomes visible in published data, the BCI is beginning to signal significantly low levels of economic activity,” the report reads.
Confidence is down
Business and consumer confidence indicators were also showing a negative outlook.
The European Commission’s Economic Sentiment Indicator, which measures operator's outlook, decreased last month.
Sentiment weakened in all sectors, with the services and construction sectors recording the largest falls, the bank said.
In April, the overall ESI stood at 52.1 percentage points, down from 87.5 in the preceding month, and below the 92 recorded a year earlier.
Sentiment within the services sector fell to a historical low of -56.8 percentage points, from 0.4 in the preceding month.
This, the bank said, mostly reflected respondents’ negative assessment of demand over the past three months.
Local businesses' assessment of the situation in recent months and their expectation of demand over the next three months also weakened sharply.
Confidence in the construction sector fell below its long-term average of -11.6 percentage points in April. It now stands at -38.9, down from 14.3 in the previous month.
Employment expectations 'strongly negative'
Employment expectations in this sector turned “strongly negative”.
Respondents reported decreasing orders and supplementary data indicated that operators expected a fall in prices over the next three months.
Industrial confidence edged down to a historical low of -45.4 percentage points, from -19.2 a month earlier.
Even consumers are feeling less confident. The bank said that a higher share of consumers now expect a deterioration in the general economic situation over the next year.
In April, confidence within the retail sector edged down to -31.7 percentage points, from -22.3 in the previous month.