Annual growth in local residents’ deposits remained strong in July, rising by 8%

A Central Bank of Malta (CBM) economic update, which largely covers the August period, shows that while business activity is normalising, uncertainty is also on the rise.

The CBM noted that as annualised inflation is also on the rise, so to are residents’ deposits as well as annual growth in credit.

The annual inflation rate based on the Harmonised Index of Consumer Prices (HICP) stood at seven per cent in August, up from 6.8 per cent in the previous month. Inflation based on the Retail Price Index (RPI) also rose, reaching seven per cent in August from 6.8 per cent a month earlier.

Annual growth in residents’ deposits remained strong in July, rising by 7.8 per cent. Meanwhile, annual growth in credit to Maltese residents rose marginally to 7.2 per cent.

The Bank’s Business Conditions Index for August indicates that annual growth in business activity is very close to its long-term average estimated since January 2000.

The European Commission’s Confidence Survey shows that economic sentiment in Malta edged down in August when compared with a month earlier, and stood below its long-term average, which is estimated since November 2002. When compared with July, sentiment deteriorated strongly in the retail sector and, to a lesser extent in industry and among consumers. By contrast, it improved in the services and construction sectors.

Additional survey information shows that compared to July, price expectations declined in industry and construction, but rose in the remaining sectors. The largest increase was recorded in the services sector.

The European Commission’s Uncertainty Indicator for Malta increased when compared with July, signalling higher uncertainty. This was mainly driven by developments in the services sector.

In July, industrial production increased in annual terms, following a contraction in the previous month. Meanwhile, the volume of retail trade increased in year-on-year terms.

The unemployment rate stood at 2.9 per cent in July, unchanged from a month earlier, and the lowest rate on record.

Residential and commercial permits declined in July, relative to their year-ago levels. In August, both the number of promise-of-sale agreements and final deeds of sale increased on a year-on-year basis, though these stood lower than in July.