Economic prospects bleak - CBM survey
The Central Bank’s Business perception survey conducted between October and November shows that very few respondents expected the economic situation to improve. In fact 47% of the respondents did not expect a major turnaround in economic activity in the next six months. Less tan 20% expected the situation to improve while more than 30% expected the economic situation to deteriorate. The most pessimistic operators The manufucturing sector remained the most pessimistic.
The Bank’s perception survey was published in the fourth issue of The Central Bank of Malta Quarterly Review. The review shows that imports have been growing faster than exports and this has had a negative impact on real GDP growth during the first three quarters of the year. As a result real GDP growth over the first three quarters was up by 0.6% over the same period in 2003.
According to the same review the slowdown in the manufacturing sector has persisted in the third quarter of the year as firms reported reduced sales, investment and employment.
As regards inflation the upward trend persisted into the fourth quarter of the year reaching 2.8% levels in November. This increase in inflation is chiefly attributed to higher fuel costs.
In commenting on the Bank’s monetary stand the review notes that the bank’s decision to leave the central intervention rate unchanged at 3%, led to stability in domestic money market interest rates. However as money market rates abroad rose slightly, the premium on the Maltese lira short-term interest rates narrowed between the end of June and end-November.
The report notes that as a result of a lower consolidated fund budget, the deficit for the first nine months of 2004 contracted by Lm 25.9 million reaching Lm 109.9 million.