IMF consultation

On September 4, 2009, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Malta:

After a period of sustained expansion following successful EU entry, Malta started feeling the effects of the global downturn in the fall of 2008, with declining trade flows and investment. More recently, private consumption also weakened, as the labor market prospects deteriorated, and growth slowed substantially in the early-2009. Although inflation has begun moderating recently, it has remained the highest in the euro area since October 2008, and reached 3.4 percent in the second quarter of 2009, mostly as a result of a lagged impact of energy price increases and imperfect pass-through in food prices..

Banks have so far withstood the global financial turmoil relatively well, as they were protected by their limited exposure to structured products, a traditional retail funding model, and conservative lending policies. Credit has proved resilient, and no government intervention to shore up capital or liquidity has been necessary. Nonetheless, some institutions suffered large valuation losses on their security portfolio, and credit concentration in the construction and real estate sectors remains a concern, especially as property prices have fallen noticeably recently...