August Signals Economic Recovery
There are some positive signs following the economic avalanche brought forth by COVID-19. Some interesting signs of economic recovery have been recorded in August. With that said, the COVID-19 pandemic has led to a tough blow on government finances with a significant deficit of over a hundred and fifty million registered in July, as reported by the Central Bank of Malta.
Based on an indicator for measuring the levels of economic activity, the Business Conditions Index shows an improvement over the previous month. That said, the index rating remained much below the long-term average, meaning that there is a long way to go to reach pre-pandemic levels.
Based on the latest data, it also seems that confidence in different industries has increased when compared to July. This can be noticed in the construction and services sectors.
One of the positive elements is the fact that unemployment has decreased, which may signal that things are slowly getting back to a certain degree of normality.
As mentioned earlier, the large deficit remains one of the country’s biggest problems. This deficit can be correlated with a significant decline from government revenue through taxes and the high-level expenditure allocated for COVID-19 related measures, to cushion its impact on the economy and Maltese families.
Data by the Central Bank of Malta shows that the option for loan moratoria was opted for by one in every six customers. This is once again another measure aimed at safeguarding the livelihood of Maltese families and alleviate the economic pressure caused by the pandemic.
Another financial cushion was the COVID-19 Guarantee scheme offered through the Malta Development Bank. By the end of July, three hundred and forty businesses had applied for the scheme. The amount provided for businesses almost reached the two hundred and forty million Euro mark. In this regard, it is very clear to see that without this government intervention, many would be at their knees, with both businesses and individuals paying a hefty price.
Only time will tell whether this is the start of a rebound following some very bleak months.
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