Current account balance improves by €85.4 million

Preliminary estimates of the external transactions of Malta in the April-June period reveal an improvement in the current account balance of €77.1 million.

Bringing forth this amelioration was essentially a decrease of €76.5 million in the net negative balance of the goods account as well as an increase of €39.9 million in the net positive balance of the services account of the statement.

The goods account was marked by a fall in import outlays of €264.2 million that more than offset a decrease in export revenues of €187.7 million. The services account was mostly affected by an increase in travel earnings of €23.5 million plus a net favourable balance in other services.

In contrast, the current account balance was also adversely affected by unfavourable movements in both the income account as well as the current transfers account. The net negative balance in the income account rose by €30.8 million while the net positive balance in the current transfers account decreased by €8.5 million. The income account was essentially influenced by a decline in interest receipts on bonds and notes held by financial intermediaries operating in Malta, whereas the current transfers account was affected by a drop in government transfer receipts from non-resident entities.

The capital account was characterised by net inflows of €15.7 million as against net inflows of €4.6 million last year, whereas the fi nancial account was marked by net outflows of €303.6 million as compared to net outflows of €126.7 million during the second quarter of 2012.

Fuelled by new capital as well as changes in trade balances held with foreign investors, direct investment in Malta increased by €136.8 million when compared to a decline of €33.9 million last year. On the contrary, direct investment abroad dropped by €17.6 million as opposed to an increase of €8.7 million a year ago.

The portfolio investment account registered net outflows of €1,573.8 million this quarter as compared to net outflows of €714.0 million last year, while the other investment account recorded net inflows of €1,074.1 million as against net inflows of €637.2 million in the April to June period last year.

Reflecting the above movements in the statement, the reserve assets of the country dropped by €15.2 million as opposed to an increase of €18.3 million a year ago.

During the period under review, Malta's current account balance with the European Union improved by €199.4 million when compared to last year. This was essentially due to lower imports of goods, as well as higher exports of services, from and to the EU. On the contrary, Malta's current account balance with the rest of the world deteriorated by €122.3 million when compared to the corresponding period a year ago.