Provisional figures of the international economic and financial transactions of Malta during the fourth quarter of 2009 reveal that the economy recorded a deterioration in the current account balance of €72.6 million. Indeed, the net balance in the current account worsened from a net deficit of €140.2 million during the December 2008 quarter to €212.8 million during the corresponding quarter in 2009.

Leading towards this outcome was a combination of unfavourable shifts recorded in net balances of three of the main accounts that compose the statement. In fact, the negative balance in the current transfers account deteriorated by €63.6 million, from a net deficit of €75.7 million during the last quarter in 2008 to €139.3 million during the relative quarter in 2009; whereas the net negative balance in the income account worsened by €23.1 million, from a net deficit of €47.1 million during the fourth quarter in 2008 to €70.3 million during the period under review. Also, the net positive balance in the services account declined by €10.3 million, from a net surplus of €153.7 million during the December 2008 quarter to €143.4 million during the corresponding quarter in 2009.

The net balance in the current transfers account was negatively affected by government transfer payments that exceeded government transfer earnings recorded during the period under consideration. The net balance in the income account was characterised by a net fall in interest receipts that resident financial institutions earned on their holdings of foreign debt instruments. The net balance in the services account was adversely influenced by a rise in outlays on transportation services, together with a fall in earnings from the provision of similar services to non-residents. Moreover, travel earnings from tourists visiting Malta declined while expenditure by residents travelling overseas increased when compared to the corresponding quarter in 2008. On the other hand, other services during the quarter under review improved over the corresponding quarter in 2008.

In contrast, however, the net balance in the goods account contracted favourably by €24.4 million, from a net deficit of €171.0 million during the last quarter in 2008 to €146.6 million during the December quarter in 2009. Indeed, the net balance was positively influenced by a fall in import outlays of €72.4 million that more than offset the drop in export receipts of €48.0 million registered during the quarter under review.

As regards the capital and financial part of the statement, the capital account was characterised by net inflows of €57.6 million as opposed to net inflows of €10.0 million during the December 2008 quarter. The financial account was shaped by net inflows of €82.2 million as against net inflows of €322.0 million during the fourth quarter in 2008.

Direct investment abroad registered net outflows of €27.2 million as compared to net outflows of €42.5 million during the December 2008 quarter. Direct investment in Malta recorded net inflows of €181.9 million as opposed to net inflows of €271.2 million during the last quarter in 2008.

The portfolio investment account was marked by net outflows of €840.3 million as against net inflows of €2,656.1 million during the fourth quarter in 2008. The other investment account was characterised by net inflows of €785.1 million as compared to net outflows of €2,344.6 million during the last quarter in 2008. Also, the financial derivatives account was shaped by net inflows of €6.8 million as opposed to net outflows of €307.9 million during the December 2008 quarter.

During the period under review, the reserve assets of the economy rose by €24.0 million as compared to a fall of €89.7 million during the corresponding period in 2008.

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