On strong footing

During the last three months of 2023, annual real GDP growth rose by 4.3%.

The latest Quarterly Review of the Central Bank of Malta reports that, during the fourth quarter of 2023, annual real gross domestic product (GDP) growth rose by 4.3%. Growth was driven by net exports, with the Bank reporting that growth in economic activity is exceeding that of its resources. This means that there is a degree of over-utilisation of the economy’s productive capacity.

The Bank’s Business Conditions Index (BCI) also remained slightly above its historical average.  Developments in the labour market remained positive, with the unemployment rate low from a historical perspective and well below that in the euro area. The Bank noted that the job vacancy rate and its labour tightness indicator remained at an elevated level.

Consumer price pressures eased further during the quarter under review, driven by slower growth in the prices of services, processed food, and non-energy industrial goods. Annual inflation in industrial producer prices index fell strongly, while other indicators such as the domestic producer price index, Eurostat’s construction cost index and the goods imports deflator, also suggest easing cost pressures.

The current account of the balance of international payments turned into a surplus from a deficit a year earlier. This was due to a narrowing of the merchandise trade deficit, and higher net receipts from services.

The general government balance registered a deficit of 4.9% of GDP, below the 5.5% registered a year earlier. Similarly, the general government debt-to-GDP ratio was lower when compared to the preceding year.

Meanwhile Maltese residents’ bank deposits increased on the previous year, reflecting mainly higher balances belonging to households. According to the Bank’s Financial Conditions Index, in the fourth quarter of 2023, financial conditions turned loose from a historical perspective.

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