Early figures on the international economic and financial transactions of Malta during the second quarter of 2010 portray a deterioration in the current account balance of €32.9 million, from a net surplus of €136.1 million during the June 2009 quarter to one of €103.3 million during the June quarter under review.

Generating this worsening was essentially an adverse shift in the net balances of both the current transfers account as well as the income account of the statement. In fact, the net positive balance in the current transfers account contracted by €126.9 million, from a net surplus of €148.9 million during the June 2009 quarter to one of €22.0 million during the period under consideration; while the net negative balance in the income account rose by €37.9 million, from a net deficit of €29.8 million during the second quarter of 2009 to one of €67.7 million during the corresponding quarter this year.

In a different direction, however, the visible trade gap in the goods account shrunk favourably by €95.6 million, from a net deficit of €238.4 million during the June 2009 quarter to one of €142.7 million during the period under review; while the net positive balance in the services account improved by €36.3 million, from a net surplus of €255.4 million during the second quarter of 2009 to one of €291.7 million during the June quarter this year.

The improvement in the net balance of the goods account was brought about by an increase in export earnings of €173.6 million that was stronger than the rise in import outlays of €78.0 million. Moreover, the amelioration in the net balance of the services account was produced by a favourable increase in the net positive balances of the travel account and the other services account which were respectively affected by higher earnings from tourism and lower expenditure on a number of services acquired from abroad.

In the capital and financial part of the statement, the capital account was characterised by net inflows of €34.0 million as compared to net inflows of €9.8 million during the June 2009 quarter; while the financial account recorded net outflows of €170.0 million as compared to net outflows of €353.8 million during the June quarter last year.

Direct investment in Malta recorded net inflows of €741.3 million as compared to net outflows of €28.0 million during the second quarter of 2009; while the direct investment abroad remained almost unchanged with net outflows of €24.6 million.

The portfolio investment account was shaped by net outflows of €1,406.1 million as compared to net outflows of €358.8 million during the June 2009 quarter; while the financial derivatives account was marked by net inflows of €80.5 million as compared to net inflows of €67.6 million during the second quarter last year. The other investment account was characterised by net inflows of €363.8 million as compared to net inflows of €47.8 million during the June 2009 quarter.

During the period under review, the reserve assets of the country fell by €75.1 million as compared to an increase of €57.7 million during the April to June period in 2009.?

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