Early estimates of the international economic and financial transactions of Malta during the first quarter reveal an improvement in the current account balance of €159.1 million, from a net deficit of €246.0 million during the March 2009 quarter to one of €86.9 million during the period under review.

Contributing towards this favourable outcome was an amelioration in the net balances of the income account, the goods account and the services account of the statement. Indeed, the net negative balance in the income account shrunk by €100.1 million, from a net deficit of €166.3 million during the first three months of 2009 to €66.2 million during the corresponding period this year. The visible trade gap in the goods account contracted by €90.8 million, from a net deficit of €234.0 million during the March 2009 quarter to €143.1 million during the first quarter this year. Also, the net positive balance in the services account improved by €11.9 million.

The income account was primarily affected by a turnaround in the retained profits of international financial institutions operating in Malta; a result that was driven by substantial dividend payments carried out by these entities during the period under consideration. On the other hand, the goods account was positively influenced by an increase in export receipts of €176.9 million. This was more than the rise in import outlays of €86.1 million registered during the same period. Also, the services account was affected by an increase in earnings from tourists visiting Malta, as well as by higher revenue from the supply of a wide range of services to non-resident consumers abroad.

On the other hand, the current account balance was adversely affected by a deterioration in the net negative balance of the current transfers account of €43.7 million, from a net deficit of €12.2 million during the first quarter of 2009 to €56.0 million during the relative period this year.

In the capital and financial account of the statement, the capital account was marked by net inflows of €0.5 million as compared to net inflows of €1.2 million during the first quarter of 2009; whereas the financial account was shaped by net outflows of €6.9 million as against net inflows of €417.2 million during the March quarter last year.

The direct investment abroad registered net outflows of €11.1 million as compared to net outflows of €8.1 million during the March 2009 quarter; whereas the direct investment in Malta recorded net outflows of €203.1 million as against net inflows of €271.0 million during the first three months of 2009. The portfolio investment account was characterised by net outflows of €659.9 million as compared to net inflows of €311.6 million during the first quarter of 2009; while the financial derivatives account was marked by net outflows of €53.4 million as opposed to net inflows of €128.4 million during the March quarter last year. The ‘Other Investment’ account was shaped by net inflows of €913.5 million as against net outflows of €13.9 million during the first three months of 2009.

During the period under review, the reserve assets of the country declined by €7.1 million as compared to a rise of €14.9 million during the March quarter last year.

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