Malta's current account in deficit

Malta’s current account balance in the third quarter this year registered a net deficit of €36 million.

A provisional statement on Malta’s money inflows and outflows with the rest of the world reveals a turnaround in the current account balance of €90.8 million, from a net surplus of €54.7 million during the September 2008 quarter to a net deficit of €36 million during the third quarter this year, the National Statistics Office said.

It said that the main accounts that composed the current account statement, with the exception of the goods account, recorded significant deteriorations in their net balances for the period under review when compared to the corresponding period last year.

The net positive balance in the current transfers account shifted by €72.4 million, from a net surplus of €10.5 million during the September 2008 quarter to a net deficit of €61.8 million during the corresponding quarter this year.

Also, the net negative balance in the income account worsened by €44.9 million, from a net deficit of €39.2 million during the September 2008 quarter to €84.1 million during the third quarter of 2009.

The net positive balance in the services account fell by €36.3 million, from a net surplus of €412.4 million during the July to September period in 2008 to €376.1 million during the corresponding period this year.

The net balance in the current transfers account was unfavourably affected by an increase in government transfer payments that was stronger than the increase in government transfer revenues recorded during the period under review, whereas the income account was mainly influenced by an increase in retained earnings that were due to foreign investors having direct ownership in locally-established institutions.

Moreover, the net balance in the services account was primarily affected by a fall in earnings from tourists visiting the Maltese Islands as well as by an increase in outlays on a variety of services that were acquired from abroad.

In an opposite direction, however, the visible trade gap in the goods account contracted favourably by €62.8 million, from a net deficit of €329 million during the September 2008 quarter to €266.2 million during the relative quarter this year.

The receipts from merchandise exports fell by €75.3 million while the expenditure on merchandise imports dropped by €138.1 million. The capital and financial account of the statement, the capital account was marked by net inflows of €1.9 million when compared to net inflows of €6.1 million during the September quarter last year; whereas the financial account was characterised by net outflows of €5.3 million as against net outflows of €239.8 million during the third quarter of 2008.

The direct investment abroad was shaped by net outflows of €6.1 million as opposed to net outflows of €57.4 million during the July to September period in 2008; whereas the direct investment in Malta was marked by net inflows of €233 million when compared to net inflows of €118.5 million during the September quarter last year.

The portfolio investment account was characterised by net outflows of €1,016.8 million as against net outflows of €867.6 million during the third quarter of 2008; while the other investment account comprised net inflows of €707 million as opposed to net inflows of €541 million during the same period last year.

The reserve assets of the country fell by €94.2 million when compared to a drop of €42.3 million during the September quarter last year.