Recession bottoming out - Central Bank

Economic decline appeared to be "bottoming out" in the third quarter of last year, the Central Bank said yesterday in its latest quarterly review.

The economy posted negative growth of 2.1 per cent in the quarter ending in September, a smaller drop than that recorded in the previous quarter.

"The contraction of economic activity appeared to be bottoming out. Both private and public consumption recovered, as did investment," the Central Bank said.

It said a drop in exports contributed to the negative growth.

Labour market conditions remained "weak" with employment declining "moderately" on a year-on-year basis. Unemployment remained "broadly stable" during the September quarter after having risen in the first half of the year.

Meanwhile, business sentiment improved in the last quarter of 2009, with operators in the manufacturing and services sectors reporting improved business prospects. Companies in the construction industry were more pessimistic, however.

The Central Bank said that the consumer confidence index remained in negative territory but was generally stable.

On balance, it added, respondents reported higher order books while stocks of finished goods were described as adequate.

Expectations about production levels for the following months remained positive and above those recorded in the previous quarter. This notwithstanding, opinions with respect to employment opportunities remained pessimistic.

Over the last three months of 2009, sentiment among service providers moved erratically before ending the year on a positive note. Respondents said there was a reduced level of pessimism among service providers concerning employment expectations, while financial considerations were indicated as the main factor limiting their business activity.

Tourism sector operators reported deterioration in their business situation in the recent past while they expected their business conditions to improve in 2010.