Malta's economy continued to grow at a much faster rate than the eurozone average in the third quarter of last year, the Central Bank said today.
GDP growth during that quarter, at 3 per cent, was almost double the eurozone average, with inflation at 0.9 per cent (compared to the 0.4 per cent eurozone average) and labour market conditions remaining favourable.
Residents' deposits also continued to grow at a fast pace, with low interest rates contributing to a further shift towards overnight deposits, the Central Bank noted in its first Quarterly Review for 2017.
The Central Bank found that people spent more money on clothing, housing, utilities and health as private consumption growth increased to 3.1 per cent from 2.2 per cent the previous quarter, reflecting faster growth in estimated disposable income.
On the other hand, gross fixed capital formation fell by a significant 22.3 per cent on an annual basis, "from extremely high levels a year earlier".
The Central Bank said the drop was driven by a sharp decline in investment in machinery, equipment and non-residential construction. Both the private and public sectors experienced declines. While private sector investment was affected by the timing of capital outlays in energy and aviation,
While private sector investment was affected by the timing of capital outlays in energy and aviation, public sector investment was lower because of the "extremely strong" level of investment a year earlier, "as projects part-financed by the EU 2007-2013 programme reached completion", the Central Bank said.
Yields on treasury bills and government bonds as well as interest rates on deposits and loans to Maltese residents all fell during the third quarter of 2016.
From a fiscal perspective, Q3 of 2016 saw the government deficit narrow when compared to 2015, with the balance showing a 0.6 per cent surplus when measured on a four-quarter moving sum basis. The lower deficit allowed the government's debt-to-GDP ratio to fall to 60.4 per cent.
Forecasts
The Central Bank expects the Maltese economy to continue growing at a steady pace, although it believes "growth is set to moderate over the forecast horizon".
A combination of domestic cost pressures and an increase in oil prices is likely to bump up inflation, the Central Bank said.