Malta's current account balance at the end of the June quarter registered a net surplus of €78.7 million down from €114.5 million at the end of the same quarter last year, according to preliminary estimates published by the National Statistics Office.

The estimates, on the international economic and financial transactions carried out by Malta during the second quarter, show that this was the result of a deterioration in the net balances of both the income and services accounts.

The net deficit in the income account worsened by €123.6 million, from a net negative balance of €71.5 million during the June 2010 quarter to one of €195.1 million during the corresponding quarter in 2011; whereas the net surplus in services account fell by €8.3 million, from a net positive balance of €316.2 million during the second quarter of 2010 to one of €307.9 million during the relative quarter this year.

The net balance in the income account was influenced by the twofold effect of a fall in interest receipts from abroad by international financial institutions operating in Malta, as well as by an increase in dividend payments and retained earnings that are due to foreign investors having direct ownership in resident enterprises.

The net balance in the services account was adversely shaped by the increase in the net negative balance of the transport account that was partially offset by an increase in the net positive balance of the travel account.

In contrast, however, the visible trade gap in the goods account contracted by €70.9 million, from a net deficit of €143.4 million during the June 2010 quarter to one of €72.6 million during the corresponding quarter this year, while the net positive balance in the current transfers account rose by €25.2 million, from a net surplus of €13.2 million during the second quarter of 2010 to one of €38.4 million during the relative period this year.

The net balance in the goods account was influenced by a rise in export revenues of €151.9 million that was stronger than the increase in import outlays of €81 million registered during the period under consideration; whereas the current transfers account was affected by a fall in government transfer payments that outpaced the decline in government transfer receipts recorded during the June quarter.

In the capital and financial part of the statement, the capital account was marked by net inflows of €29.5 million when compared to net inflows of €40.6 million registered during the second quarter of 2010; whereas the financial account was shaped by net inflows of €85.9 million as opposed to net outflows of €144.6 million recorded during the June quarter last year.

The direct investment abroad registered net outflows of €11.9 million when compared to net outflows of €35.1 million measured during the June 2010 quarter; while the direct investment in Malta recordednet inflows of €96.9 million when compared to net inflows of €728.8 million registered during the second quarter last year.

The portfolio investment account was characterised by net outflows of €54.9 million when compared to net outflows of €1,389.4 million recorded between April and June last year; whereas the other investment account registered net outflows of €8.4 million as against net inflows of €395.8 million measured during the June quarter a year ago.

Additionally, the financial derivatives account was marked by net inflows of €15.9 million when compared to net inflows of €80.3 million registered during the second quarter of 2010.

Summing up, the reserve assets of Malta decreased by €48.3 million when compared to a decrease of €75.1 million during the corresponding period in 2010.