Business and consumer confidence are crucial barometers of economic health, reflecting the sentiment and expectations of key economic actors. These indicators provide valuable insights into future economic activity, influencing investment decisions, spending patterns and overall market dynamics.

This article examines the state of business and consumer confidence in Malta, drawing on the latest data and analysis provided by the Central Bank of Malta and the European Commission.

The European Commission’s Economic Sentiment Indicator (ESI) for Malta showed a positive development in January 2025, increasing to 99.3 from 93.5 in December 2024. This improvement also placed the ESI higher than the 97.1 recorded in January of the previous year. Despite this upturn, the indicator remained below its long-term average of around 100.0, estimated since November 2002. A month-on-month analysis reveals that sentiment improved across all sectors, with the exception of industry. Notably, the most significant improvements were observed in the construction and services sectors. Data indicates that the overall increase in sentiment was primarily driven by the services sector and, to a lesser extent, consumers. Conversely, the industrial sector was the main factor contributing to the ESI remaining below its long-term average in January.

A more granular view of business confidence across different sectors reveals a varied landscape.

• Construction: The sentiment indicator for the construction sector experienced a substantial increase in January 2025, rising to 6.2 from -18.4 in December 2024. This surge propelled the indicator above its long-term average of -7.9. This positive shift was underpinned by respondents assessing their overall order books to be above normal levels and employment expectations for the coming months turning positive.
• Services: Confidence in the services sector also saw an increase, reaching 36.0 in January 2025 compared to 19.7 in the previous month. This further strengthened its position above its long-term average of 19.6. The improvement was broad-based across all three components of the indicator, with particularly strong expectations for demand over the next three months.
• Retail Trade: The confidence indicator in the retail sector showed a slight improvement but remained negative and below its long-term average of 0.1. In January 2025, sentiment averaged -4.8, a marginal increase from -5.3 in December. This mixed picture is further illustrated by improved expectations for business activity in the next three months turning positive, while the assessment of sales over the past three months became negative. Additionally, a larger proportion of respondents reported above-normal levels of finished goods stocks.
• Industry: The sentiment indicator in industry declined further to -26.6 in January 2025, from -24.3 in December 2024. This placed it well below its long-term average of -4.5. A larger share of firms assessed their order book levels as below normal. However, production expectations for the months ahead became less negative, and fewer firms reported above-normal levels of finished products.

Consumer confidence experienced a significant positive shift in January 2025, turning positive for the first time since April 2022. The indicator averaged 3.0, a notable increase from -2.2 in December 2024 and remained above its long-term average of -10.0. This improvement was evident across all components of the confidence indicator, with the most substantial gains seen in consumers’ expectations about the general economic situation and their intentions to make major purchases over the next 12 months, both of which turned positive.

The Central Bank’s Business Conditions Index (BCI) indicated that annual growth in business activity in January 2025 picked up slightly from December 2024 and continued to stand slightly above its long-term average estimated since January 2000. Several components contributed to this above-average growth, including residential permits, tourism and tax receipts.

On the other hand, the European Commission’s Economic Uncertainty Indicator (EUI) for Malta increased in January 2025 compared to December 2024, signalling higher uncertainty. The EUI stood at 16.1, up from 15.6 in December. Higher uncertainty was observed across most sectors, with the largest increase recorded in the services sector.

The European Commission’s Employment Expectations Indicator (EEI) for Malta also showed an upward trend, increasing to 109.7 in January from 101.1 in December. Data suggests that this increase was widespread across productive sectors but was largely driven by the services sector, which was also the main reason for the overall EEI being above its long-term average in January.

In summary, the economic sentiment in Malta presented a mixed but generally improving picture in January 2025. Overall sentiment, as measured by the ESI, increased but remained slightly below its long-term average, with strong positive contributions from the construction and services sectors, and a notable turnaround in consumer confidence. However, the industrial sector continued to exhibit low confidence levels, with the retail sector has a rather soft positive sentiment. On the other hand, economic uncertainty as perceived by businesses and consumers increased. The rise in employment expectations, particularly in the services sector, aligns with the improvements seen in business and consumer sentiment. These indicators collectively provide a snapshot of the prevailing economic climate in Malta at the beginning of 2025, highlighting both areas of optimism and ongoing concerns across different sectors. Continued monitoring of these confidence indicators will be essential for gauging the future trajectory of the Maltese economy.