Exports fuel 3.5 per cent growth in first quarter

The Central Bank has published the second issue of its Quarterly Review for 2007, which analyses economic and financial developments both in Malta and abroad since the beginning of 2007 with an emphasis on the first quarter.

The review notes that in the first quarter of this year the economy expanded by 3.5 per cent on a year earlier, up from 3.1 per cent in the previous three-month period. Growth was generated mainly by higher net foreign demand, as exports rose while imports declined. Consumption also had a positive impact on growth, even though it expanded at a slower pace. On the other hand, gross fixed capital formation declined.

Inflation continued to fall, with the 12-month moving average rate dropping to 2.2 per cent by March.

The unemployment rate based on the Labour Force Survey remained below seven per cent in the first quarter, practically unchanged since the second half of 2006, and lower than a year earlier. The shift in employment from the public to the private sector continued. Full-time positions accounted for most of the jobs created.

In its analysis of fiscal developments, the review reports that during the first three months of 2007 the general government deficit fell over a year earlier as revenue grew faster than expenditure. General government debt also contracted during the year to March.

The bank's new business survey, carried out between May and June, which focuses primarily on developments in the services sector, indicate that second-quarter profits and turnover were both higher than in the first quarter. These patterns are expected to persist in the following quarter.

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