28 March - 3 April 2001
Visible trade gap widens by Lm42m
The balance of international payments for last year's fourth quarter reveal a deterioration of Lm75.5 million in Malta's economic and financial transactions, another fall of Lm176.9 million in the current account balance, while the visible trade gap widened during the period under review by Lm42 million to reach Lm270.6 million.
According to statistics released by the National Office of Statistics, the visible trade gap in the goods account jumped from Lm228.7 million in 1999 to Lm270.6 million in 2000. While an increase was noted in merchandise exports (Lm283.2 million) it was insufficient to outweigh the rise in merchandise imports of Lm325.2 million during the period. The rise in imports was due to a notable increase in the imports of semi-finished industrial supplies, capital goods and fuel.
A provisional statement on Malta's international economic and financial transactions reveals a substantial deterioration in the current account balance of Lm75.7 million.
In fact, the deficit in the current account worsened from a net negative balance of Lm60.4 million during the December 1999 quarter to a deficit of Lm136.0 million during the period under review.
Accounting for such a result was a shift that emanated from a significant increase in retained profits by foreign-owned enterprises that impinged adversely on the income account, as these are owed to the direct investors.
Additionally, the amount of interest payments paid to non-residents during the period under review were higher than the interest receipts earned from abroad, thus contributing further to the deterioration registered in this account.
Meanwhile, a further deterioration was detected in the current account balance of Lm176.9 million, from a net deficit of Lm49.3 million in 1999 to a net deficit of Lm226.2 million in 2000.
Accounting for this upward shift in the deficit was an across the board deterioration in all accounts making up the current account statement.
The major impact on the current account balance emanated, however, from the income account. In fact, the net balance in this account plummeted by Lm78.1 million.
An increase in the reinvested profits of foreign-owned enterprises owed to direct investors and which subsequently had the dual effect of negatively affecting the income account and positively the direct investment account with the extent of the profits that have been retained in the running entities.
Lower travel earnings coupled with higher expenditure by Maltese travelling abroad were also factors that set back the current account, while a decline in the services receipts from overseas, together with an increase in services payments to non-residents were the elements that likewise impinged adversely on the current account.