25 November 2004

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Third quarter GDP grows 2.2 per cent

Malta’s Gross Domestic Product at current market prices increased by 2.2 per cent to Lm494.8 million over this year’s third quarter.
Rising oil prices between August and September and the ensuing effect on the water, gas and electricity supply sector completely offset a considerable increase in the value added in the Financial Intermediation sector.
Apart from the financial sector, other increases were registered in the gross value added of the Real Estate, Renting and Business Activities sector, the Transport, Storage and Communication sector, the Wholesale and Retail Trade sector and the Hotels and Restaurants sector. The Manufacturing sector’s gross value added, however, was marked by a decline.
In real terms the GDP increased by 1.4 per cent to Lm444.3 million, while the Gross National Income decreased by 6.9 per cent to Lm465.7 million.

Electricity, water and gas
The Electricity, Gas and Water Supply sector’s value added declined by almost 70 per cent to Lm1.7 million, while its contribution to GDP dropped from 1.3 per cent in the second quarter last year to 0.4 per cent in the third quarter of 2004. While output remained practically unchanged, a marked increase of Lm3.9 million or 25.2 per cent in the sector’s intermediate consumption was registered mainly due to oil price hikes. The sector’s compensation of employees rose by 8.7 per cent to Lm6 million.

Wholesale and Retail
The value added generated by the Wholesale and Retail trade industry registered an increase of 7.4 per cent over the corresponding quarter last year. The proportion of value added paid in compensation to employees working in this sector decreased by 0.8 per cent over this same period. The contribution to total gross value added at basic prices by this industry increased from 11.2 per cent to 11.9 per cent during the period under consideration.
Hotels and Restaurants
The Hotels and Restaurants sector’s value added increased by Lm1.2 million or 3.1 per cent to Lm40.2 million. An improvement was registered in output and compensation of employees. The sector’s operating surplus rose by Lm0.8 million, or 4.9 per cent, to Lm17million, over the same quarter last year. This sector’s relative contribution to the gross value added stood at 9.3 per cent.

Real Estate, Renting and Business Activities
Quarterly estimates for the Real estate, Renting and Business activities exhibit improvements in the share of the gross value added, from 12.9 per cent last year to 13.5 per cent this year. The industry’s gross value added expanded by Lm3.8 million to Lm58.6 million, an increase of 6.9 per cent when compared to the same quarter last year. The resulting growth was manifested positively in the factor incomes, with the industry’s compensation of employees and operating surplus improving by 6.2 and 7.5 per cent respectively.

Transport, Storage and Communication
In the third quarter this year, the contribution of the Transport, Storage and Communication sector to gross value added increased to 11.7 per cent. In nominal terms, gross value added increased by 5.7 per cent to Lm50.8 million from Lm48million during the same quarter last year. This increase was mostly due to the substantial increase in the air transport subsector’s contribution to gross value added with all remaining sub-sectors registering a slight improvement.

Financial Intermediation
At 5.9 per cent, the percentage contribution of the Financial Intermediation sector increased from 4.7 per cent in same quarter last year. Value-added in the banking sub-sector advanced by 31.3 per cent. Value-added in the other subsectors remained at last year’s levels.
Public Administration and Defence
The gross value added of the Public Administration and Defence sector increased by Lm3.3 million, or 10.6 per cent, when compared to the same quarter last year. This increase resulted from higher employment earnings (+Lm2.5 million) in the government ministries, departments, and the extra-budgetary units. Meanwhile the level of employment income within the local councils sub-sector was practically at par with the income for the same quarter last year. This sector’s relative contribution to the gross value added amounted to 7.9 per cent.

The Education sector registered an increase in value added of 3.9 per cent, underpinned by an increase of 6.5 per cent in the compensation of employees when compared to the corresponding quarter in the previous year. The government was the driving force behind the total rate of growth in gross value added for this industry, contributing up to 3.7 per cent of this increase. The contribution, or share, to total gross value added at basic prices by this industry increased from 7.3 per cent last year to 7.5 per cent in this period.

Health and Social Work
The Health and Social Work sector’s value added edged up to Lm24.6 million, increasing its share of the GDP from 5.5 to 5.7 per cent. Output rose by 7.9 per cent, which, however, was offset by higher intermediate costs that increased by 22.9 per cent. This sector’s compensation of employees went up by 5.4 per cent to Lm19.1 million.

Expenditure aggregates
At Lm304.2 million, household consumption expenditure registered a nominal increase of Lm17.5 million or 6.1 per cent, when compared to Lm286.7 million last year. In real terms, consumers’ expenditure increased by Lm7.4 million to Lm279.9 million.
Increases in nominal expenditure outlays were registered in respect of food and non-alcoholic beverages, alcoholic beverages, tobacco, clothing and footwear, housing, water, electricity, gas and other fuels, furnishings, household equipment and routine maintenance of the house, health, transport, communication, recreation and culture, education and miscellaneous goods and services. A decline in expenditure outlays in hotels and restaurants was registered during the period under review. The registered increase in imports of consumer goods largely contributed towards the overall growth in consumers’ expenditure.
The NPISH final consumption expenditure increased by 0.6 per cent to Lm7.3 million over the same quarter last year. In real terms, NPISH consumption declined by 3.6 per cent.
Compared to the same period last year the General Government final consumption expenditure increased by Lm8.9 million or 9.7 per cent and reached Lm100.5 million. This increase was mainly the result of higher outlays on health (+Lm2.7 million), on education (+Lm1.9 million), as well as on general public services (+Lm1million). The other functions of government also reported increases. In real terms, government consumption increased by 7.8 per cent. Outlays on gross capital formation went up by 13.5 per cent to Lm113.8 million. At constant prices the increase in investment amounted to 12.1 per cent.
Total exports contracted by 1.1 per cent to Lm380.6 million. This drop is wholly attributable to the exports of goods. On the other hand, total imports advanced by 6.5 per cent to Lm411.6 million, with imports of goods increasing by Lm26.2 million.
The levels of exports and imports of services remained practically unchanged. In real terms, the decline in export prices resulted in real exports rising by 5per cent to Lm428.2 million. Imports prices also dropped substantially, meaning that imports were ‘inflated’ rather than deflated. Imports reached Lm460.3 million in real terms, an increase of 9.2 per cent over the corresponding quarter last year.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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