Current account balance improves, reserve assets down 1st qtr

An improvement in the current account balance of €159.1 million was registered when compared to the previous period last year. However, during the period under review, the reserve assets of the country declined by €7.1 million as compared to a rise of €14.9 million during the March quarter last year.

In fact, the NSO reported a net deficit of €246.0 million during the March 2009 quarter was transformed into a positive balance of €86.9 million during the first three months of this year.

According to the NSO, contributing towards this favourable outcome was an amelioration in the net balances of the income account, the goods account and the services account of the statement.

The NSO also reported that the net negative balance in the income account shrunk by €100.1 million during the first three months of 2010 when compared to the same period last year.

In fact, the NSO reported a net deficit of €166.3 million registered during the first three months of 2009 was changed into a positive balance of €66.2 million during the first quarter of 2010.

The visible trade gap in the goods account contracted by €90.8 million, from a net deficit of €234.0 million during the January to March quarter last year to €143.1 million during the first quarter this year. The net positive balance in the services account also improved by €11.9 million when compared to the same period last year.

According to the NSO, the income account was primarily affected by a turnaround in the retained profits of international financial institutions operating in Malta, a result that was driven by substantial dividend payments carried out by these entities during the period under consideration.

On the other hand, the goods account was positively influenced by an increase in export receipts of €176.9 million. This was more than the rise in import outlays of €86.1 million registered during the same period.

The services’ account was also affected by an increase in earnings from tourists visiting Malta, as well as by higher revenue from the supply of a wide range of services to non-resident consumers abroad.

However, according to the NSO, the current account balance was adversely affected by a deterioration in the net negative balance of the current transfers account of €43.7 million, from a net deficit of €12.2 million during the first quarter of 2009 to €56.0 million during the relative period this year.

In the capital and financial account of the statement, the capital account was marked by net inflows of €0.5 million as compared to net inflows of €1.2 million during the first quarter of 2009.

However, the financial account was shaped by net outflows of €6.9 million during the first quarter of 2010 as against net inflows of €417.2 million during the March quarter last year.

According to the NSO, the direct investment abroad registered net outflows of €11.1 million during the first quarter of 2010 as compared to net outflows of €8.1 million during the March 2009 quarter.

On the other hand, the direct investment in Malta recorded net outflows of €203.1 million during the first quarter of 2010 as against net inflows of €271.0 million during the first three months of 2009.

The portfolio investment account was characterised by net outflows of €659.9 million during the first three months of 2010 as compared to net inflows of €311.6 million during the first quarter of 2009

Likewise, the financial derivatives account was marked by net outflows of €53.4 million as opposed to net inflows of €128.4 million during the March quarter last year.

Finally, the other investment account was shaped by net inflows of €913.5 million during the first quarter of 2010 as against net outflows of €13.9 million during the first three months of 2009.