The Central Bank of Malta published its fourth Business Dialogue report for 2026, finding continued improvement in business conditions during the third quarter, but weaker expectations and investment intentions. Contacts with 59 nonfinancial companies between July and September showed that the net balance reporting improved conditions fell to 37% from 41% in the previous quarter. The balance anticipating stronger activity declined to 41% from 49%, while input cost pressures remained widespread. Manufacturing recorded the strongest current performance, while wholesale and retail activity declined on balance amid stronger competition and a seasonal slowdown. Construction and real estate firms had the most favourable outlook, followed by services, with manufacturers and retailers more cautious. The net balance planning increased investment dropped to 15% from 27%, with spending focused on capital expenditure, diversification and operational improvements. Hiring intentions moderated less sharply, with the balance expecting to increase employment easing to 42% from 44%, despite persistent shortages of skilled workers. The net balance reporting higher non-labour input costs fell to 81% from 86%, with transport and raw materials remaining prominent sources of pressure. The balance raising selling prices declined to 42% from 51%, suggesting that many firms absorbed part of the cost increases rather than passing them on fully. An accompanying analysis found that 19% of contacted firms expected unit costs to rise by more than 5% over the next 12 months. Labour costs were the main driver of cost expectations, alongside transport costs and uncertainty surrounding the conflict in the Middle East.

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