Foreign direct investment records net €99.1 decrease in first quarter 2011

Provisional figures of the international economic and financial transactions of Malta during the March quarter show a contraction of €166.8 million in Malta's current account deficit, from a net deficit of €221.6 million during the March 2011 quarter to a net negative balance of €54.8 million this year.

Contributing towards this amelioration was essentially an across-the-board improvement in the net balances of the main accounts in the current account statement.

Of particular relevance were the decreases registered in the net negative balances of both the goods account as well as the income account, of €109.6 million and €40.7 million respectively.

The goods account was influenced by the twofold effect of a decline in import outlays of €59.3 million and an increase in export earnings of €50.3 million. Meanwhile, the income account was primarily affected by an increase in interest receipts on debt instruments as well as loans and deposits held by resident financial institutions.

Additionally, when compared to the corresponding quarter in 2011, the net positive balance in the services account increased by €8.9 million, while the net deficit in the current transfers account decreased by €7.6 million.

In the capital and financial part of the statement, the capital account was characterised by net inflows of €9.1 million against net outflows of €3 million during the March quarter last year. The financial account was marked by net outflows of €125.4 million compared to net inflows of €40.4 million during the corresponding quarter last year.

Foreign direct investment in Malta recorded net decreases of €99.1 million when compared to net increases of €41.6 million during the January to March period in 2011. Direct investment abroad registered net inflows of €3.2 million compared to net inflows of €0.8 million during the first quarter last year.

The portfolio investment account recorded net increases of €152.7 million compared to net decreases of €143.6 million during the March quarter in 2011. The financial derivatives account was characterised by net inflows of €56.1 million as compared to net inflows of €1.3 million during the corresponding period in 2011. The other investment account recorded net decreases of €112.2 million against net increases of €153.1 million during the January to March period in 2011.

As a result of the above shifts, the reserve assets of Malta rose by €126.1 million compared to an increase of €12.7 million during the first three months last year.

A geographical analysis of Malta's external transactions during the first quarter this year shows an improvement in the current account deficit of Malta with the European Union of €55.2 million, as well as an amelioration in the current account surplus of Malta with the rest of the world of €111.5 million.

Indeed, a significant improvement was registered in Malta's current account balance with both Germany and France of €33 million and €27.5 million respectively. Further improvements were also recorded in the current account balance with various other European countries, America and Africa.