Malta's deficit: €54.8 million Jan - Mar 2012

Malta's current account balance during the first quarter this year showed a deficit of €54.8 million.

Provisional  figures  of  the  international  economic  and  financial  transactions  of  Malta  during  the March  quarter  show  a  contraction  of  €166.8  million  in  Malta's  current  account  deficit,  from  a  net deficit of €221.6 million during the March 2011 quarter to a net negative balance of €54.8 million this year.

Contributing towards this amelioration was essentially an across-the-board improvement in the net balances of the main accounts in the current account statement.  Of particular relevance were the decreases registered in the net negative balances of both the goods account as well as the income account, of €109.6 million and €40.7 million respectively.  The goods account was influenced by the twofold effect of a decline in import outlays of €59.3 million and an increase in export earnings of €50.3  million.    Meanwhile,  the  income  account  was  primarily  affected  by  an  increase  in  interest receipts  on  debt  instruments  as  well  as  loans  and  deposits  held  by  resident  financial  institutions.

Additionally, when compared to the corresponding quarter in 2011, the net positive balance in the services  account  increased  by  €8.9  million,  while  the  net  deficit  in  the  current  transfers  account decreased  by  €7.6  million.

In the capital and financial part of the statement, the capital account was characterised by net inflows of €9.1 million against net outflows of €3.0 million during the March quarter last year. The financial account  was  marked  by  net  outflows  of  €125.4  million  compared  to  net  inflows  of  €40.4  million during the corresponding quarter last year.

Foreign direct investment in Malta recorded net decreases of €99.1 million when compared to net increases  of  €41.6  million  during  the  January  to  March  period  in  2011.  Direct  investment  abroad registered net inflows of €3.2 million compared to net inflows of €0.8 million during the first quarter last year.

The portfolio investment account recorded net increases of €152.7 million  compared to net decreases of €143.6 million during the March quarter in 2011.  The financial derivatives account was characterised by net inflows of €56.1 million as compared to net inflows of €1.3 million during the corresponding period in 2011.  The other investment account recorded net decreases of €112.2 million against net increases of €153.1 million during the January to March period in 2011.

As a result of the above shifts, the reserve assets of Malta rose by €126.1 million compared to an increase of €12.7 million during the first three months last year.

A geographical analysis of Malta's external transactions during the first quarter this year shows an improvement in the current account deficit of Malta with the European Union of €55.2 million, as well as an amelioration in the current account surplus of Malta with the rest of the world of €111.5 million.

Indeed,  a  significant  improvement  was  registered  in  Malta's  current  account  balance  with  both Germany and France of €33.0 million and €27.5 million respectively.  Further improvements were also recorded in the current account balance with various other European countries, America and Africa.