Economic activity in Malta during the second quarter of 2017 remained robust, with real gross domestic product (GDP) rising by 6.4% on an annual basis, more than three times the rate registered for the euro area as a whole, according to the Quarterly Review published today by the Central Bank of Malta.

Growth was driven by net exports, as domestic demand decreased in annual terms, mainly on account of a drop in investment, which was exceptionally high a year earlier.

The labour market remained favourable, with employment rising further and unemployment reaching an all-time low of 4.1%.

The annual rate of inflation, measured by the Harmonised Index of Consumer Prices (HICP), eased during the period under review, standing at 1% in June, down from 1.2% three months earlier. HICP inflation remained below that in the euro area, which stood at 1.3% in June.

Monetary dynamics remained robust during the second quarter of 2017. Residents’ deposits with monetary financial institutions (MFIs) operating in Malta continued to grow steadily in annual terms, while the shift to overnight deposits persisted. At the same time, credit to residents of Malta eased, mainly driven by developments in credit to general government and loans to non-financial corporations (NFCs).

As regards fiscal developments, in the second quarter of 2017 the general government surplus declined when compared with the same period in the previous year, as expenditure rose at a faster pace than revenue.

When measured on the basis of a four-quarter moving sum, general government recorded a surplus of 2.0% of GDP, slightly lower than the 2.3% in the previous quarter. General government debt, as a share of GDP, stood at 56.8% at the end of June 2017.