GDP recovery grows stronger

Gross Domestic Product figures maintained a steady recovery in the second quarter this year, rising by 2.2 per cent in real terms in the June quarter on top of an increase of 1.4 per cent in the first quarter, according to figures issued yesterday by the National Statistics Office. GDP had dropped by 1.0 per cent in the whole of last year.

Only a few days ago, figures showed a rise in domestic exports for August. But on Monday, NSO figures showed a sharp drop in June tourist arrivals and the office yesterday also reported a deterioration in the balance of international payments.

The NSO said yesterday that in the second quarter this year, GDP increased nominally by Lm12.4 million, to Lm415.6 million, when compared to the same quarter last year. This was equivalent to a nominal growth of 3.1 per cent. In real terms, GDP increased by 2.2 per cent, or Lm7.6 million, to Lm355.3 million.

The Gross National Product went up by Lm24.5 million or 6.1 per cent to Lm430 million, an increase in real terms of 5.6 per cent, or Lm19.7 million.

The office said that during the second quarter this year, the agriculture and fishing sector accounted for 2.4 per cent of GDP at market prices and the sector's nominal contribution to GDP remained practically unchanged at Lm8.6 million.

The expansion of the building industry continued, with the sector achieving the highest sectoral growth. The value added of this industry amounted to Lm11.9 million, an increase of 18.2 per cent over the same period last year. It was estimated that employment income in this sector increased by 22.4 per cent to Lm7.8 million while profits increased by 10.8 per cent to Lm4.1 million.

The manufacturing sector's nominal contribution to GDP dropped by Lm1 million, or 1.2 per cent to Lm80.5 million. Reported profits in this sector declined by two per cent while employment income dropped by 0.5 per cent The downward trend registered by the electronics sub-sector in 2001 and the previous quarter was reversed.

The contribution of the transport and communications sector to GDP dropped by 14.8 per cent or Lm3.5 million to Lm20.4 million. Within this sector, income from employment dropped by 5.1 per cent to Lm13.7 million and there was a 1.7 per cent drop in the level of employment. The main contributor towards this reduction was the air transport sector with a decrease in wages of 18.3 per cent and a sharp reduction in profits. At 5.7 per cent, this sector's relative contribution to GDP was down from 6.8 per cent last year.

The wholesale and retail sector saw an increase in value added of 7.4 per cent to Lm42.2 million. Employment income rose by 1.2 per cent to Lm10 million. Employment levels dropped slightly, but profits were up by 9.5 per cent to Lm32 million.

The performance registered in this sector was largely due to an increase in imports of consumer and capital goods and strong local sales by the manufacturing sector. The sector's contribution to GDP rose to 11.9 per cent

The contribution of the insurance, banking and real estate sector to the GDP increased by 10 per cent or Lm3.2 million to Lm35.0 million with a slight increase in income from employment. Profit grew advanced by 15.4 per cent to Lm22.7 At 9.9 per cent, this sector's relative contribution to the GDP increased when compared to 9.1 per cent last year.

The Government enterprises' sector's share of the GDP went up from 5.6 to 6.0 per cent. In nominal terms, the gross value added went up by Lm1.7 million, or 8.7 per cent, to Lm21.2 million, mainly due to an increase in the profit component of this sector, which rose by almost Lm2.0 million.

The contribution of the public administration sector to the GDP amounted to Lm58.8 million, an increase of Lm2.6 million, or 4.6 per cent. At 16.6 per cent, this sector's relative contribution to the GDP increased when compared to 16.1 per cent last year.

The private services sector's overall performance improved by Lm1.2 million or 2.8 per cent to Lm42.0 million. Profitability increased by 5.0 per cent, and income from employment registered an increase of 1.7 per cent to Lm27.1 million.

The NSO said that in the second quarter this year, consumers' expenditure increased by Lm13.1 million to Lm274.0 million.

The highest increase recorded related to outlays on medical care and health services, whilst the lowest increase was registered on consumers' expenditure on miscellaneous goods and services.

Government expenditure on goods and services increased from Lm80.8 million to Lm87.9 million or 8.8 per cent. Government expenditure on government departments increased by 10.2 per cent, whilst expenditure by government entities increased by 17.1 per cent. In real terms, compared to the same quarter last year, government consumption expenditure increased by Lm4.8 million, or 7.5 per cent to Lm69.0 million from Lm64.2 million.

Exports of goods and services declined by 5.7 per cent while imports of goods and services went up by 5.6 per cent.

The NSO also said yesterday that early indicators on the international economic and financial transactions of Malta during the second quarter of this year showed a deterioration of the current account position of Lm28.6 million from a net deficit of Lm1.3 million in the second quarter of last year to Lm29.9 million during the same quarter this year.

Explaining the deterioration, the office said the net surplus in the services account had contracted by Lm26.3 million to Lm21.8 million while the visible trade gap in the goods account expanded by Lm16.8 million from a net negative balance of Lm53.7 million during the second quarter of this year to Lm70.5 million during the same period this year June.