Favourable turnaround in current account balance of €158 million

Provisional estimates of Malta's external economic and financial transactions during the second quarter disclose a favourable turnaround in the current account balance of €158.5 million, from a net deficit of €104.8 million during the June 2011 quarter to a net surplus of €53.7 million during the June quarter this year.

Generating this amelioration was essentially an across-the-board improvement in the net balances of all the main accounts that comprise the current account statement.

The goods account registered a contraction in the visible trade gap of €93.3 million, from a net deficit of €348.9 million during the June 2011 quarter to one of €255.5 million in 2012; whereas the income account improved by €56.2 million, from a net deficit of €157.8 million during the second quarter of 2011 to one of €101.6 million during the corresponding quarter this year.

The net positive balance in the services account increased by €6.1 million, from a net surplus of €372.6 million during the June 2011 quarter to one of €378.7 million this year. In addition, the net positive balance in the current transfers account improved by €2.8 million, from a net surplus of €29.4 million during the second quarter of 2011 to one of €32.2 million during the quarter under review.

The net balance in the goods account was influenced by the dual effect of a rise in export revenues of €82.0 million and a fall in import outlays of €11.3 million; whereas that in the income account was particularly determined by a rise of €98.9 million in interest earnings on debt securities held by resident financial institutions. Moreover, the net balance in services was essentially shaped by a rise in travel earnings from inbound tourism of €18.7 million.

In the capital and financial part of the statement, the capital account was marked by net inflows of €10.6 million compared to net inflows of €29.2 million during the second quarter of 2011; whereas the financial account was shaped by net outflows of €216.9 million against net inflows of €63.0 million during the June quarter last year.

The direct investment in Malta recorded a net decrease of €97.6 million as opposed to a net increase of €53.5 million during the June quarter last year; while the direct investment abroad increased by a net of €7.3 million against a net rise of €9.5 million during the June quarter in 2011.

The portfolio investment account was characterised by net outflows of €749.1 million compared to net outflows of €30.3 million during the second quarter last year; while the financial derivatives account was marked by net inflows of €12.9 million compared to net inflows of €29.2 million during the June quarter in 2011. Also, the other investment account was characterised by net inflows of €642.4 million against net outflows of €28.2 million during the second quarter of 2011.

As a result of the above shifts in the entire statement, the reserve assets of Malta increased by €18.3 million.

When analysed geographically, Malta continued to register a current account deficit with the European Union (EU) and a current account surplus with the rest of the world.

Malta's current account deficit with the EU rose by €52.4 million, from a net negative balance of €245.9 million during the June 2011 quarter to one of €298.3 million during the quarter under review. On the other hand, Malta's current account surplus with the rest of the world rose by €210.9 million, from a net positive balance of €141.1 million during the second quarter last year to one of €352.0 million during the June quarter this year.