The public deficit was cut by €11.8.4 million by November, compared to a year ago, according to the Central Bank of Malta’s economic survey.
Figures for November 2014 show a €93.7 million surplus, as against a deficit of €21.6 million in November 2013, thanks to substantial increase in arrears of excise duties, with only minor increases in expenditure. The survey does not specify where the excise duties came from, these were almost certainly from Enemalta.
Between January and November 2014 the deficit fell by €118.4 million on a year earlier, to €188.9 million. Revenue rose 13.1 per cent while expenditure rose 7.2 per cent, with recurrent and capital spending up seven and 9.2 per cent, respectively.
The government’s stated target is to bring the deficit for 2014 down to €75.5 million – 2.1 per cent of GDP.
The survey said economic activity continued to expand in 2014’s third quarter, with real GDP increasing by 3.8 per cent on a year ago, driven mainly by domestic demand.
The available information for the year’s final quarter points to subdued performance in manufacturing but growth in tourism. Growth in economic activity is being reflected in the labour market, with employment expanding and the unemployment rate declining. Price pressures remain contained, with the annual rate of inflation falling to 0.4 per cent in December 2014.
During the third quarter, both domestic demand and net exports contributed to economic expansion. In turn, growth in domestic demand was mainly sustained by private and government consumption. Private consumption increased by 3.2 per cent on a year earlier, and was the largest contributor to real GDP growth, boosting it by 1.7 percentage points.
Government consumption rose 5.9 per cent, principally reflecting an increase in the government wage bill, and contributed a further one percentage point to growth. Gross fixed capital formation also increased, though, at 4.6 per cent, the annual rise was slightly smaller than in the previous quarter. The increase in investment was mainly driven by non-residential construction.
In 2014’s third quarter, Malta’s unit labour costs, measured as a four-quarter moving average, rose by 1.1 per cent on a year earlier. The increase was due to a drop in productivity, which shrank by 0.4 per cent, and a 0.7 per cent growth in compensation per employee.
The Central Bank’s property price index, which is based on advertised prices, continued to increase strongly during the third quarter of 2014. It rose at an annual rate of 7.6 per cent, down from 8.9 per cent in the previous quarter. This marks the fourth consecutive quarter of strong growth in advertised prices.
The survey also revealed that bank lending and deposit rates edged down in December.
The weighted average interest rate paid by microfinance institutions (MFIs) on all euro-denominated deposits belonging to resident households and non-financial corporations (NFCs) stood at 1.03 per cent, six basis points below its November level and 38 basis points less than a year earlier. The comparable rate charged by MFIs on outstanding loans to resident households and NFCs fell marginally by one basis point, to 4.02 per cent. At this level, it was 22 basis points less than in December 2013.