April-June 2008: Balance of Payments Transactions with the World - A provisional Balance of Payments statement for the second quarter of 2008 shows a deterioration in the current account balance of €123.3 million, from a net deficit of €46.0 million during the June 2007 quarter to one of €169.2 million during the June quarter this year.

Leading towards this outcome was essentially an equal worsening in the net balances of both the goods account as well as the income account of the statement. In fact, the visible trade gap in the goods account expanded by €107.2 million, from a net deficit of €212.4 million during the second quarter of 2007 to one of €319.6 million during the relative quarter this year. Also, the net negative balance in the income account worsened by €107.1 million, from a net deficit of €41.8 million during the June 2007 quarter to one of €148.9 million during the quarter under review.

The goods account was conditioned by the combined impact of a drop in exports receipts of €95.7 million as well as by a rise in import outlays of €11.4 million; while the income account was particularly affected by an increase in dividend payments to non-resident investors as well as by a rise in retained profits that are due to foreign investors having direct ownership in locally-operating enterprises.

In contrast, the net balance in the current transfers account improved by €47.1 million, from a net surplus of €4.2 million during the June 2007 quarter to one of €62.3 million during the corresponding quarter in 2008. Also, the net balance in the services account shifted favourably by €33.9 million, from a net surplus of €203.1 million during the June 2007 quarter to one of €237.0 million during the relative quarter this year.

Indeed, the current transfers account was influenced by a rise in government transfers receipts that were higher than the corresponding transfers payments to non-resident entities; whereas the services account was shaped by a rise in earnings from a wide spectrum of services provided to non-residents that were stronger than the increase in outlays on a number of services acquired from foreign entities abroad.

As regards the capital and financial account of the statement, the capital account was marked by net inflows of €8.1 million as against net inflows of €1.7 million during the June 2007 quarter; while the financial account was shaped by net inflows of €232.5 million as opposed to net inflows of €44.4 million during the second quarter last year.

The direct investment abroad recorded net outflows of €32.7 million as against net outflows of €6.0 million during the April to June period of 2007; while the direct investment in Malta registered net inflows of €174.6 million as opposed to net inflows of €191.4 million during the June quarter last year.

Also, the portfolio investment account was marked by net outflows of €1,495.8 million as against net outflows of €423.5 million during the June quarter in 2007; whereas the other investment account was shaped by net inflows of €1,431.6 million as against net inflows of €178.9 million during the second quarter last year. In addition, during the period under review, there were net inflows of €108.6 million in the financial derivatives account as opposed to net inflows of €26.1 million during the relative period last year.

As a result, the reserve assets of the country fell by €46.1 million as against a fall of €77.6 million during the April to June period in 2007.