Malta registers €42.6 million current account deficit in Q1 2021

Provisional figures for Malta’s external transactions show that during January-March 2021, the current account balance recorded a deficit of €42.6 million, as compared to a surplus of €29.8 million in the comparable quarter of 2020.

A National Statistics Office (NSO) announcement released on Monday shows that this deficit was primarily the result of negative net balances recorded in the goods account (€369 million), the primary income account (€245.3 million), and the secondary income account (€37 million).

This was partly offset by a positive net balance of €608.8 million recorded in the services account.

During the first quarter of 2021, the capital account registered a positive net balance of €7.2 million, €16.1 million lower than the figure recorded in 2020.

The financial account was shaped by net asset increases of €57.6 million, an increase in the balance of net assets of €159.2 million when compared to the value recorded in the same quarter of 2020.

The development in the financial account balance was mainly brought about by positive net asset balances in portfolio investment (€1,621.8 million) and other investment (€468.9 million).

This was partly offset by negative net asset balances recorded in direct investment (€1,958.9 million) and financial derivatives (€112.7 million).

Reserve assets increased by €38.4 million during the same period.

The total Q1 deficit is significantly less than the deficits recorded in Q3 and Q4 of 2020.

While the current account balance often skirts deficit figures in the shoulder months of the year, i.e. in Q1 and Q4, the middle two quarters typically generate large surpluses as the influx of tourists causes a significant boost to exports, as sales to tourists are classified.

The COVID-19 pandemic has thrown the cycle in turmoil, with Malta’s current account balance now being in deficit for a full year.