Annual growth in business activity remained well above its historical average although it is gradually normalizing as many economic variables return to pre-pandemic levels, the Central Bank said on Thursday.

In its February economic update, the Central Bank noted that the European Commission’s confidence survey shows that economic sentiment in Malta improved in January – compared to the previous month.

It remained well above its level of a year ago and also slightly exceeded its long-term average. Compared to December, confidence improved in services, construction and industry, but fell in retail trade and among consumers.

The European Commission’s uncertainty indicator for Malta has decreased compared to December. The decline in uncertainty is largely explained by developments in industry and, to a lesser extent, in the construction and retail sectors.

Consumers continued to report that they are able to predict their household’s future financial situation with relative ease. On the other hand, uncertainty increased in the services sector.

Industrial production continues to contract

In December, industrial production contracted at an annual rate for the fifth consecutive month. At the same time, retail trade volume continued to grow, but at a slower pace than before.

The jobless rate remained unchanged at 3.4% from November – and well below its pre-pandemic level.

In January, the number of final deeds of sale of residential property increased while the number of promises of sale decreased at an annual rate. Commercial permits edged up in December from their levels a year ago, while residential permits fell.

The economic update also includes data on the use of the moratorium on loan repayments offered by domestic credit institutions to residents of Malta in response to COVID-19.

Business loans subject to a moratorium remained very limited at the end of the year. At 14.1 million euros, they represented only 0.1% of the associated credit outstanding in December.

This, the bank said, reflects a recovery in income flows and the expiration of the moratorium period for most beneficiaries. By the end of the year, 654 facilities for working capital and loan repayment purposes had been granted to companies affected by the pandemic under the Development Bank of Malta’s COVID-19 Guarantee Scheme, corresponding to total sanctioned amounts of €505.9 million, or 65.0% of the target plan size.

The full economic update is available here.