Malta’s economy remained stable and slightly above its long-term trend in June, with improving business confidence and steady fundamentals, according to the latest economic update from the Central Bank of Malta.

The Bank’s Business Conditions Index showed a small rise in annual growth, keeping activity moderately above average. Meanwhile, the Economic Policy Uncertainty Index – which tracks uncertainty using local news – fell again in June, indicating a more stable and predictable policy environment.

Business and investor sentiment also improved. Both the European Commission’s Economic Sentiment Indicator and the Employment Expectations Indicator rose compared to May and stood above their long-term averages, suggesting growing optimism in the economy and the labour market.

Industry holds up, services show weakness

Economic performance varied across sectors. Industrial production increased year-on-year in May, a positive sign for manufacturing. Retail trade dipped slightly, while services output declined for the third month in a row as of April, pointing to some ongoing weakness in that sector.

Labour market and property remain strong

Malta’s unemployment rate stayed low at 2.7 per cent in May, reflecting strong labour market conditions.

The housing market remained active. Compared to a year earlier, residential building permits increased, and both promise-of-sale agreements and final deeds of sale rose in June – indicating steady demand and confidence in real estate.

Deposits rise, credit slows slightly

In May, residents’ deposits grew at a slightly faster pace than the month before, while credit growth eased marginally. This suggests that while households and businesses are continuing to save, borrowing activity may be softening slightly.

Inflation edges down, public finances improve

Inflation continued to ease in June. The Harmonised Index of Consumer Prices (HICP) fell to 2.5 per cent, down from 2.7 per cent in May. Core inflation (excluding food and energy) held at 2.4 per cent, and both rates remained above the euro area average. The Retail Price Index also showed inflation stable at 2.4 per cent.

On the Government side, public finances improved in May, with the Consolidated Fund posting a surplus compared to a deficit the year before. This was thanks to higher revenues and lower spending.

Outlook

With strong employment, improving sentiment, and a stable financial and fiscal outlook, Malta’s economy is in a solid position heading into the second half of 2025. While parts of the services sector remain under pressure, overall conditions continue to support steady growth.