By the end of 2018, FDI flows into Malta grew by a year-on-year €353m to €3.3b, up from 2017’s €3b, offering a slight rebound. Nevertheless, according to NSO figures, FDI inflow had been dropping from 2014’s €8.5b to €4.6b in 2015 and €3.7b in 2016, as the cover image of the present article shows.

On the other hand, ODI flows had been on the rise, from -€1.7b in 2014 — which signals divestment — to €4.6b in 2015, €4.8b in 2016, €6.3b in 2017, reaching €6.2b by the end of 2018.

Despite ODI flows outpacing FDI flows, the country’s total foreign direct investment stock was on a gradual rise by the year, while direct investment stock position roughly stagnated, chiefly due to divestment in manufacturing, NSO statistics suggest.

By the end of 2018, Malta’s FDI stock reached €180.9b — a year-on-year increase of €8.8b —, while the ODI stock dropped by €0.7b to €61b, NSO figures suggest.

Financial and insurance activities dominated both FDI and ODI flows in 2018, by covering 97.1% and 99.4% of the total, respectively. The vertical was the most significant contributor of both FDI and ODI between 2014 and 2018 with its share remaining well above 90%.

In foreign direct investment flows terms, financial and insurance activities roughly halved from 2014’s €8.4b to 2015’s €4.2b, dropping further to €3.2b in 2016, €2.7b in 2017 and €2.9b in 2018.

In an outward direct investment flows approach, however, after 2014’s -€1.7b — signalling divestment —, the financial and insurance activities sector jumped to €4.7b in 2015, growing further to €4.8b in 2016, €6.3b in 2017 and another €6.3b in 2018.

EDITORIAL NOTE: The present article is based on figures the National Statistics Office (NSO) has recently published in its annual publication, available for public view on their official website.

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As Business Malta reported earlier, the number of guest nights spent in rented accommodation establishments — such as Airbnb — have been growing at a much faster pace this year than that of spent in collective accommodation establishments, such as hotels. The tendency resembles international trends; rented accommodation establishments essentially appearing to lure over customers from hotels.

The most recent figures published by the NSO show that rented accommodation growth in terms of guest nights have continued to expand aggressively in August, further narrowing the gap to collective accommodation establishments, as the cover image in this article shows.

Total nights spent reached nearly 2.9 million, up by 5.8%. Nevertheless, figures by the NSO reveal that the difference between rented and collective accommodation establishments shrank below 300,000 nights in August. Beyond expenditure and traveller figures, the index of guest nights is probably the most important numeric that hotel managers look at.

Furthermore, in August, to little surprise, the number of inbound tourists peaked at an estimated 338,758, growing by 6.7% as compared to the same month a year earlier, with the vast majority of travellers arriving in the island nation to enjoy their holiday sojourn in the middle of the Mediterranean.

Since the beginning of the year, a total of 1,848,935 travellers are estimated to have arrived in Malta by the end of August, a 4.7% growth over the same period a year earlier. Figures reveal a strong start for the second half of the year that raises optimism for last year’s 2.6 million inbound tourists to be exceeded. These figures compare to the approximately 460,000 population of Malta.

The increasing number of inbound tourists have been accompanied by rising expenditure. August alone saw an estimated €329.6m spent in Malta, a year-on-year increase of 2.8%.

By the end of August, inbound tourists are estimated to have spent more than €1.5b since the beginning of the year; an increase of 3.9% as compared to the same period a year earlier.

EDITORIAL NOTE: The present article is based on figures published by Malta’s National Statistic Office (NSO). Publications used in the present article are of Inbound Tourism in 2019 for January, February, March, April, May, June, July and August.

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The growing number of inbound tourists, and figures suggesting that holidaymakers are spending more when in Malta paint a rosy picture for the tourism industry as a whole. Nevertheless, a hotelier in Malta will spend more time analysing the number of nights inbound tourists spend in the island nation, which figure might have been of elevating concern for hotel managers lately.

Although the overall number of nights spent by inbound tourists has grown every month in the first half of 2019 as compared to the respective corresponding month in 2018 — with the exception of May where a slight fall was recorded —, according to figures published by the National Statistics Office (NSO), the number of nights spent at rented accommodations — such as Airbnb — have been cutting an increasingly bigger slice of the pie, quite possibly making collective accommodation establishments — in their common name: hotels — losing out on consumers.

The first glimpse taken at the chart above outlines the summer peak season very well. The blue lines stand for collective accommodation establishments, while the red lines stand for rented accommodation establishments, showing the number of nights spent each month in 2019, based on figures published by the NSO in its monthly reports.

The percentages show the year-on-year changes per month, calculated by Business Malta, as NSO did not calculate changes in some of its monthly reports due to “absolute and percentage changes between one survey estimate and another based on less than 1,500 tourists should be treated with caution.” As such, the figures above might not be exact, but the tendency they signal is an intriguing one.

Rented accommodations cutting bigger night pie

Calculations by Business Malta based on NSO figures show that while hotels have been struggling to increase the number of nights spent by tourists at their premises in the first half of 2019, rented accommodations have been able to sharply increase their take up. Hotels have seen numbers of spent nights falling year-on-year by 10.4% (January), 7% (February), 1% (March), 10.3% (May) and 3% (July), hardly off-set by the growth of 1.1% and 1.98% in April and June, respectively.

Meanwhile, rented accommodations appeared to be striving during the first half of the year. The beginning of the year saw year-on-year growths of 56.4% and 34.7% in January and February, respectively, according to calculations by Business Malta using the figures of NSO, only to be followed by further growths of 12.5% (March), 17% (April), 6.3% (May), 15.3% (June) and 0.04% (July).

Such trends in Malta signalled by the most recent figures appear to be in synchrony with international tendencies. End-2016 research by Morgan Stanley showed that 36% of travellers having loyalty programme membership to established hotels said they had tried Airbnb, compared to 15% of non-loyalty holidaymakers, according to a Quartz report.

“This is yet another sign of Airbnb’s success in commanding the travel space, as it rolls out additional offerings in order to keep users engaged with the platform beyond one-off bookings. Airbnb is stealing hotel chains’ most valuable customers,” the Business Insider concluded in its report at the end of 2016.

Upon quick research into accommodations available in Malta on Airbnb’s platform — although the significant majority of the availabilities range from €9 to €262 per night with an average of €91 — one can find luxury villas with private swimming pools in picturesque settings available for €300-€1,000+ per night for 4-16 guests in October, maintaining the probability of stealing consumers from luxury or other high-end hotels.

Whether the figures above signal the beginning of changing consumer habits or just a haphazard fad is hard to tell for the time being. Nevertheless, with Malta seeing new boutique hotels recently added to and renovations being carried out at its shores, collective accommodation establishments might well feel disruption by the so-called sharing economy — a system where assets or services are shared between private individuals utilising the internet, and increasingly: quickly responding and easy-to-use mobile applications.

More tourists spending more money

During the first half of the year, the number of inbound tourists arriving in Malta was on an increase, albeit the peak season not appearing to stand out as compared to March and April. Still, the number of inbound tourists has been on the increase in recent years, up by 14.3% to 2.6 million in 2018, as compared to the preceding year.

Starting from an estimated 127,723 in January, in July 305,588 holidaymakers are thought to have arrived in Malta. Both June and July saw the biggest year-on-year increase; more than 5%, respectively.

The estimated number of inbound tourists totals slightly more than 1.5 million by the end of July. All eyes are on the second half of the year in anticipation whether last year’s 2.6 million can be topped, nearing the glass ceiling of 3 million. These figures compare to the approximately 460,000 population of Malta.

Expenditures by tourists arriving in the island nation have been on a steep climb in the first half of the year, too, with July peaking the per month expenditure in 2019 so far.

January’s estimated monthly expenditure of €84.7m reached €285.0m in July. This spurred the total estimated amount of expenditures in Malta in the first half of the year to peak above €1.2b.

As expenditures by inbound tourists exceeded €2.1b in 2018, the H1 figures for this year appear to be strong enough to fuel further optimism in the tourism sector as 2019 readies for the second half of the year and the post-summer season.

EDITORIAL NOTE: The present article is based on figures published by Malta’s National Statistic Office (NSO). Publications used in the present article are of Inbound Tourism in 2019 for January, February, March, April, May, June and July.

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The overall growth was chiefly fuelled by a 1.88% increase in capital goods, a growth of 1.76% in intermediate goods and 1.43% in consumer goods. The energy sector saw no price changes, according to NSO figures.

The domestic market saw an industrial producer price growth of 0.73%. Prices of capital goods increased by 2.97%, consumer goods were up by 1.47% and intermediate goods were up by 0.07%.

Non-domestic prices were up by 1.81% due to a rise of 2.33% in the non-euro area and 0.83% in the euro area.

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This all comes despite the fact that the sector has been eligible to quite some funding. The NSO report notes that the agricultural sector was assisted through the delivery of a range of financial aid through EU-funded programmes — amounting to €25.4m — which helped the net operating surplus of the sector to increase by 31.4% €71.4m.

The sector’s output increased only by a slight 0.2% to €122.1m, while expenses incurred under intermediate consumption rose by 3.8% to €64.8m. Additionally, consumption of fixed capital increased by 6.4% to a total of €6.8m, while compensation of employees rose by 7.9% to €4.5m on total, according to NSO figures.

“Ultimately, upon adding the latter surplus to the negative net property income of €1.1m recorded in 2018, the net entrepreneurial income of the sector is estimated to have improved by 32.1% to €70.3m,” the NSO report says.

Although, produce coming from secondary agricultural activities has seen growth, it was offset by drops in crop production. Agricultural holdings were up by 7.3%, animal products increased by 1.9% and livestock products grew by 1.6%; while crop production fell by 2.9%, according to NSO figures.

Intermediate consumption, which measures specific expenses incurred during the production processes of the agricultural sector, was mainly marked by increases in livestock feeding expenses, energy and fuel costs by 5.7% and 2.9%, respectively, the NSO report adds.

EDITORIAL NOTE: For further details and representation of data see the NSO’s official report available through its website.

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Gross Value Added (GVA) — the net result of output valued at basic prices less intermediate consumption valued at purchasers’ prices — was up by €191.8m in Q2 2019 when compared to the same quarter last year.

The upward trend was boosted by arts, entertainment and recreation, repair of household goods and other services increasing by €40.1m (9.7%); professional, scientific and technical activities, administrative and support service activities increasing by €37.4m (9.4%); and wholesale and retail trade, transportation and storage, accommodation and food service which increasing €32.5m (5.4%).

Considering the effects of income and taxation paid and received by residents to and from the rest of the world, Gross National Income (GNI) — different to GDP measure in terms of net compensation receipts, net property income receivable and net taxes (minus subsidies) receivable on production and imports from abroad — is estimated at €3.001b at market prices for the second quarter of 2019.

Final consumption expenditure increased by 6.5% in nominal terms and 4.8% in volume terms, according to the expenditure approach — a method used for calculating GDP and is derived by adding the consumption of households, government and non-profit institutions serving households, investment and net exports.

Household expenditure was up by 5.4% in nominal terms and 3.8% in volume terms, and government expenditure grew by 9.9% in nominal terms and 7.3% in volume terms; the two segments being the main contributors to the growth, according to NSO figures.

Gross fixed capital formation increased by 3.6% in nominal terms and 0.8% in volume terms, while exports of goods and services increased by 2.3% in nominal terms and decreased by 0.2% in volume terms. Imports of goods and services increased by 0.8% in nominal terms and decreased by 2.3% in volume terms. Recent statistics by another NSO report have shown that Malta’s trade deficit was widening in the first seven months of the year.

The €204m increase in GDP at current prices is estimated to have been distributed into a €69.5m increase in compensation of employees, a €129.9m increase in gross operating surplus and mixed-income and a €4.6m increase in net taxation on production and imports, as compared to the second quarter of the preceding year, according to the income approach — which is used to measure economic activity is the income approach which shows how GDP at market prices is distributed among compensation of employees, operating surplus of enterprises and taxes on production and imports, net of subsidies.

“The coming budget will ensure that this growth is sustained so that it continues to be enjoyed by Maltese and Gozitan families through a higher standard of living and a better quality of life”, said Minister for Finance Edward Scicluna, according to a press statement issued by the Department of Information (DOI) after the NSO figures had been released.

Editorial note: The full publication by NSO is available for download on the official website of the office. The present article has been updated with a quote from the finance minister.

The post Malta’s GDP grows 6.6% in Q2, provisional estimates show first appeared on The Malta Business Weekly.

Imports rose by €70.1m while exports declined by €66.4m when compared to the same month of the previous year.

The increase in the value of imports was primarily fuelled by machinery and transport equipment (€45.9m) and mineral fuels, lubricants and related materials (€27.9m).

Exports overall were dragged down by mineral fuels, lubricants and related materials (€78.4m), partly outweighed by an increase of €9.9m in chemicals, according to NSO data.

Deficit widens overall in 2019

During the first seven months of the year, the trade deficit grew further widened by €675m to €2.451b. Imports increased by €648.6m, while exports dropped by €26.4m.

Imports were boosted by the machinery and transport equipment (€706.4m) segment, partly outweighed by a decrease of €70.4m in mineral fuels, lubricants and related materials.

The significant export drop of mineral fuels, lubricants and related materials (€86.9m), was partly outweighed by increases of €38.8m and €30.4m in miscellaneous manufactured articles and chemicals, respectively.

In the first seven months of the year, imports from the European Union dropped by €346.8m to €2.918b — which constitutes the 66.8% of total imports –, as compared to the same period a year earlier.

Main increases and decreases in imports were registered from the United Kingdom (€812.2m) and Italy (€211.0m), respectively. With respect to exports, the main increase was directed to Spain (€30.3m), whereas Egypt (€22.2m) registered the highest decrease, NSO figures show.

EDITORIAL NOTE: Data in this article presents international trade in goods registered up to the 2 September cut-off date. The full report with charts and tables of further data is available on the official website of the NSO.

In line with the NSO’s errata corrige note, the present article has been updated as follows: the figure related to imports/arrivals from euro area has been amended to €346.8m from the erroneous €319.7m.

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In a year-on-year comparison, increases were registered in the production of energy (15.7%) and capital goods (2.3%) while the production of intermediate goods and consumer goods decreased by 2.3% and 1.6%, respectively.  

In a month-on-month comparison, increases were registered in the production of energy (4.7%), consumer goods (4.55) and capital goods (2.5%) while the production of intermediate goods saw a decrease of 2.6%.

The full report with charts and figures is available for download at the official website of NSO. 

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A €15.2m rise in contributory benefits spending was the catalyst for the increase, partially offset by a €0.2m drop in non-contributory expenditure.

In addition, contributory benefits outlay totalled €415.3m, reflecting a 3.8% increase from 2018. This was due to a €13.1m rise reported under pensions in respect of retirement, the result of a higher number of two-thirds pensioners, followed by growth in contributory bonus (€1.5m) and pensions in respect of widowhood (€1m).

On the contrary, the outlay was down in pensions in respect of invalidity (€0.3m) and other benefits (€0.1m). Furthermore, non-contributory spending amounted to €96.7m, which was 0.2% lower than during the same period in 2018.

The social assistance registered the biggest drop in the expenditure of €3.1m, while minor drops were reported in supplementary assistance (€0.3m) and child allowance (€0.1m). Nevertheless, increased outlay was reported under disability pension/allowance (€1.5m), old age pension (€1.3m), in-work benefit (€0.4m) and medical assistance (€0.1m).

Between April and June 2019, social security benefits outlay reached €282.3m, 82.6% of which was spent on contributory benefits.

It represented a €9.1m rise from the €273.2m recorded during the Q2 2018 and was the result of an €8.8m increase in the contributory pensions in respect of retirement.

Fewer beneficiaries

The national minimum pension of widows reported the largest drop in beneficiaries with 433 fewer people in the first half of the year as compared to the corresponding period of 2018. At the same time, a 1,489 drop in beneficiaries occurred, representing the largest among the twenty-three active non-contributory benefits.

The largest share of non-contributory recipients was registered under children’s allowance (40,549). At the same time, in-work benefit recipients exhibited the largest increase of 626, rising from 3,497 in 2018 to 4,123 a year later.

During Q2 2019, the two-thirds pension (49,278) and children’s allowance (39,705) reported the largest cohorts of contributory and non-contributory beneficiaries respectively.

The full report with charts and tables is available for download at the website of NSO.

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The main cause of the increase was the price index of apartments, and also the maisonettes price index went up, the NSO says.

Furthermore, the PPI registered a rise of 5.3% in the first quarter of 2018, when compared to the same quarter of 2017. Therefore, the percentage of increase was higher during the first quarter of this year, according to the NSO provisional figures. 

In addition, the PPI is compiled on a quarterly basis in order to ensure that all figures are substantiated by larger samples and shows the price changes of residential properties purchased by households.

The PPI covers apartments, maisonettes and terraced houses only. The price for the properties being included is deemed to be indicative of developments in the property market in general.

The full report including charts and visual representation of data is available for download at the website of NSO.

EDITORIAL NOTE: The cover picture of the present article has been changed to one that resembles the Maltese property market better.

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