CBM publish first edition of 2024 of Business Dialogue

The latest business dialogue held between the Central Bank of Malta and non-financial corporations shows that in the fourth quarter of 2023, the net share of firms reporting better business conditions decreased when compared to the previous quarter. It stood at 35%, down from 44% in the third quarter of the year. On balance, conditions were less positive than before across most economic sectors, except in services where conditions improved.

Looking ahead, a net 42% of firms expected an improvement in short-term business activity, lower than 47% in the preceding quarter.

The net share of companies reporting higher input costs has rebounded to the level reported in the second quarter of 2023. Indeed, a net 60% of contacts reported that input prices have increased in recent months, up from 46% in the previous period.

The net share of firms reporting higher selling prices stood at 50% in the last quarter of 2023, 2 percentage points higher than in the previous quarter.

In the quarter under review, the net share of firms planning to invest more this year decreased significantly to 15%, from 50% in the third quarter.

The net share of firms planning to increase their staff complement decreased by 5 percentage points, to a net 40%. Companies have continued to express concerns about labour and skill shortages and pressures to increase wages. Indeed, two-thirds of contacted firms expect wages in 2024 to rise by more than 5%.

This publication incorporates a box which compares the predictions of firms reported during the first contact made during 2023 to the outcomes reported during the second interview held in 2023. We find that 55% correctly predicted the direction of change in their firm’s business conditions.