Less unemployed, slower property price increase, more tourists in Q3 2017

Malta’s economy continued to grow steadily in the third quarter of 2017, with real gross domestic product rising by 7.2% on a year earlier, according to statistics published in the Central Bank of Malta’s 2018 Quarterly Review.

Both domestic demand and net exports were behind this expansion, the Central Bank said. Services were the main driving force behind the growth, but the manufacturing and construction sectors also gave a good contribution.

Government consumption increase by 15.8% in the September quarter, contributing 2.2 percentage points to the rise in real GDP. The biggest contribution to this came from sales, which are netted against government expenditure, and rose significantly. Higher inflows from the Individual Investor Programme partly supported this.

Consumer confidence increases, industrial declines

Survey results show that the indicator of consumer confidence rose to eight in the third quarter of 2017, up from five in the preceding quarter - the highest it has been since the survey started in 2011.

The main driver of this was savings expectations for the year ahead, with a larger share of respondents, compared to the previous quarter, expecting their general economic and financial situation to improve over the next year.

Confidence in the retail sector rose to eight in the third quarter of last year, from -3 in the second quarter, largely driven by firms’ assessment of past and expected business activity, according to the Review.

Similarly, confidence in the services rose from 27 in the second quarter to 33 in the third, reaching a seven-year high.

Construction sector confidence increased considerably in 2017’s third quarter, driven completely by firms’ employment expectations for the subsequent three months. Moreover, survey data indicates that in the third quarter of that year, more respondents reported positive building activity developments.

Industrial sector confidence fell to five in the third quarter last year, compared to eight in the previous quarter, due to firms’ production expectations and their assessment of the number of orders they would be getting, with many respondents saying they expected less than normal for the season.

Number of unemployed decrease

The number of unemployed decreased in last year’s third quarter compared to a year prior, standing at 4% compared to 4.8% in the respective quarters, well below that of the euro area.

Female participation in the workforce rose by 1.5% to 58.1% while that of males rose by 0.5% to 83.4%.

The increase in employment in the third quarter of 2017 reflect more growth in the quantity of full-time jobs, with part-time employment decreases.

Jobsplus data showed 2,487 people on average registered as unemployed in the that quarter, 789 persons less than those employed in the third quarter of 2016.

Deceleration in rise in residential property prices

National Statistics Office data shows a slow down in the rate of increase in its Property Price Index for the third quarter of 2017.

The index is based on actual transactions on apartments, maisonettes and terraced houses, and saw a rise of 4.1% on an annual basis, following a 4.5% increase in the second quarter, indicating that property prices are now increasing at a slower rate.

The price of residential property is being supported by numerous factors, the Review said, including the government’s first-time buyers scheme, and low bank interest rates making buying property a more attractive investment.

Tourism continues to grow

The tourism sector continued to expand at a solid pace in the third quarter last year, with more tourists coming to Malta, staying more nights and increasing their expenditure.

The number of tourists coming to the island reached almost 772,000 in that quarter, increasing by 12.6% over the same quarter in 2016.

Leisure tourists were the main force behind this increase, but business visits also rose.

General government surplus increases significantly

A significant increase in the government’s general surplus was registered in 2017’s third quarter, the Review shows, with a 1.2% increase over the second quarter.

Government revenue increased by almost €190 million, or 19.5%, compared to the third quarter of 2016, with a growth in tax inflows accounting for the majority of this.

Expenditure by the government also rose, by almost €58 million, or 6.1% compared to the same quarter a year prior, with the composition of such expenditure moving more towards recurrent expenditure.

The government’s debt-to-GDP ratio fell 1.6% points to less than 55% in September 2017, a decrease of almost €24 million compared to June the same year.