“Eurozone Economic Growth…”

Eurozone economic growth slowed sharply quarter-on-quarter as expected in the last three months of 2021, confirmed data on Tuesday.  Activity was hit by another wave of COVID-19 infections and surging prices impacted disposable incomes.  Eurostat confirmed its earlier estimate that gross domestic product in the 19 countries sharing the euro rose 0.3% quarter-on-quarter in the October-December period for a 4.6% year-on-year increase.  Eurozone employment increased by 0.5% quarter-on-quarter and by a 2.1% year-on-year increase.  As illustrated by Eurostat, data also showed that a jump in energy prices hit the eurozone’s trade balance moving it into a seasonally unadjusted trade deficit of EUR 4.6 billion in December from a surplus of EUR 28.3 billion a year earlier as exports rose 14.1% while imports surged 36.7%.  The more expensive energy boosted Europe’s energy trade deficit to EUR 276.7 billion last year from 157.2 billion in 2020.  

US Producer Prices

US producer prices climbed more than expected in January amid the supply chain situation.  The producer price index (PPI) for final demand jumped 1% last month after climbing 0.4% in December, said the Labour Department on Tuesday.  In the 12 months through January, the PPI increased 9.7%.  The shift in spending from services to goods during the COVID-19 pandemic and the support from the government boosted demand, which far outpaced supply, boosting inflation.  Meanwhile an acute shortage of workers on factory floors and other places, together with issues arising from the supply chain, are making it difficult to get products on the markets.  The cases have been dropping in the US unlike in Asia, which is a major source of raw materials for US factories.  When excluding volatile food, energy and trade services components, producer prices rose 0.9% in January, while the core PPI gained 0.4% in December.  In the 12 months through January, the core PPI increased 6.9% after increasing 7% in December.   

UK Inflation

Consumer prices in the UK rose at the fast pace in nearly 30 years last month.  This will raise the chances that the Bank of England (BOE) will hike interest rates for a third meeting in a row.  The annual rate of consumer price inflation rose to 5.5% in January, the highest since March 1992, said the Office for National Statistics on Wednesday.   The BOE does not expect inflation to return to its 2% target until early in 2024.  Whilst the BOE has already raised interest rates twice since December, lifting rates to 0.5% from 0.1% and financial markets expect a further rate rise to 0.75% or 1% on March 17 after the BOE’s next meeting.   The biggest contributor for the increased inflation besides the global supply chain problems are energy prices.  Core inflation that excludes volatile prices for energy, food, alcohol and tobacco, rose to 4.4% in January from 4.2% in December, its highest since these records started in 1997.  Meanwhile, retail price inflation (a longer-running series which the ONS says is no longer accurate) was the highest since March 1991 in January at 7.8%.  Excluding volatile products such as food, tobacco and petroleum products, the 9.3% increase was the biggest since annual comparison commenced in 1997. 

Malta:  Residential Property Transactions – January 2022

A press release dated 14 February, 2022 shows that in January 2022, the number of final deeds of sale relating to residential property amounted to 1,114 representing an increase of 10.4% increase when compared to those registered the year before.  The aggregate value of these deeds amounted to EUR 232.5 million, which is 11.1% higher than the corresponding value recorded in January 2021.  1,032 or (92.6) of these final deeds were for households whilst the rest were for companies.  The highest numbers of final deeds of sale were in the Gozo region and the region of Mellieha and San Pawl Il-Bahar at 200 and 124 respectively.  The lowest number of deeds were noted in Il-Birgu, L-Isla, Bormla, and Il-Kalkara, the region of Imdina, Had-Dingli, Rabat, Imtarfa and Imgarr. 

Malta:  Direct Investment in Malta and Abroad – January – June 2021

A press release dated 16 February, 2022 shows that Foreign Direct investment flows were estimated to be EUR 1.5 billion during the first six months of 2021.  This shows a decline of EUR 183.7 million over the corresponding period in 2020.  Financial and insurance activities accounted for 85.8% of FDI flows in Malta.   In June, 2021 the stock position of FDI in Malta amounted EUR 200.2 billion, an increase of EUR 8.2 billion over the same month of 2020.  Financial and insurance activities recorded the largest share of 97.5% of FDI stocks in June 2021.  Meanwhile, during the first six months of 2021, direct investment flows abroad amounted to EUR 3.2 billion, an increase of EUR 3 million over the amount registered in the previous year.  This change was mainly brought about by changes in claims on direct investors.  The stock position of direct investment abroad stood at EUR 58.5 billion in June, 2021 down by EUR 775 million over the stock position in 2020.  Financial and insurance activities accounted for 99.5% of the total FDI abroad. 

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