Malta’s financial sector continues to demonstrate resilience, as both deposits and credit extended by monetary and financial institutions in the country maintained a strong growth trajectory.

This is according to the Central Bank of Malta’s latest Economic Update for February, which highlights key economic indicators reflecting the nation’s financial health.

According to the report, the annual growth of business activity in January stood slightly above its historical average. The Bank’s Business Conditions Index signalled a stable economic climate, while the Economic Policy Uncertainty Index remained significantly below its long-term trend, indicating reduced economic uncertainty.

One of the standout trends from the report was the sustained expansion in both resident deposits and credit over the 12 months leading to December. Although the annual rate of increase moderated slightly compared to November, the overall pace of growth remained robust.

Additional economic indicators also painted a mixed but generally positive picture. The European Commission’s Economic Sentiment Indicator for Malta saw an increase in January, though it remained below its long-term average. Meanwhile, employment expectations rose above their historical norm, reinforcing confidence in the labour market.

On the production side, industrial output in December showed continued growth, albeit at a slower pace than in November. Retail trade, however, gained momentum. In contrast, the services sector saw a downturn in November, registering a negative annual rate of change.

Inflationary pressures remained subdued, with the Harmonised Index of Consumer Prices (HICP) inflation rate holding steady at 1.8 per cent in January, well below the euro area average. Core inflation, excluding energy and food, stood at 2 per cent. The Retail Price Index (RPI) showed a slight uptick in January, rising to 1.4 per cent from 1.2 per cent in December.

Meanwhile, activity in the real estate sector showed mixed results. While the number of residential building permits in December exceeded the previous year’s level, both promise-of-sale agreements and final deeds in January were lower than those recorded a year earlier.

Overall, the Central Bank of Malta’s findings suggest that while certain sectors experience fluctuations, the sustained growth in deposits and credit reflects continued confidence in the financial system and a stable economic outlook.