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.

The post Malta’s trade deficit grows further in July 2019 first appeared on The Malta Business Weekly.

Increases were recorded in the energy (4.7%), capital goods (3.7%) and consumer goods (0.25) sectors, as compared to the preceding quarter. However, a drop of 0.4% was recorded in the sector of intermediate goods.  

Seasonally-adjusted industrial employment decreased by 0.5%, working hours saw a drop of 0.3% and seasonally-adjusted industrial gross wages and salaries decreased by 0.9%. 

Nevertheless, working-day adjusted industrial turnover grew by 2% compared to the corresponding quarter of 2018. 

Increases were recorded in the energy (8.5%), intermediate goods (2.6%) and capital goods (1.2%) sectors when compared to the same period a year earlier. However, a decrease of 1% was recorded in the consumer goods sector. 

In addition, the year-on-year unadjusted industrial employment reported a drop of 1.2% and working-day adjusted industrial working hours decreased by 2.2%. Working-day adjusted industrial gross wages and salaries saw a growth of 1.3%.

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

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The year-on-year growth was due to a rise of 2.68% in intermediate goods, 1.95% in capital goods and 1.43% in consumer goods. No price changes were registered in the energy sector.

Industrial producer prices for the domestic market went up by 0.98%. Price rises were recorded in capital goods (2.97%), consumer goods (1.51%) and intermediate goods (1.14%). No price changes took place in the energy sector. 

Non-domestic prices increased by 2.28% due to a rise of 2.71% within the non-euro area and 1.49% within the euro area.

In a month-on-month comparison, the producer price index decrease was due to a drop of 1.13% in intermediate goods while no changes were registered in the other sectors.

Prices within the domestic market dropped by 0.20% due to a decrease of 0.88% in the intermediate goods sector. 

Non-domestic prices declined also by 0.64% due to a drop of 0.82% within the non-euro area and 0.29% within the euro area. 

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

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The largest share of guest nights was reported in four-star hotels, accounting for over 1.3m nights, some 48.3% of the total. 

The average length of stay went down to 4.8 nights from the average of 5 nights registered during the same quarter of 2018. The net use of bed-places stood at 73.6%, down by 1.3 percentage points.

In addition, there were 206 active collective accommodation establishments in June 2019 with a net capacity of 18,155 bedrooms and 41,680 bed-places on a national level. 

Gozo and Comino see drops

On a regional level, total guests in Malta numbered 547,084, up by 3.4% over the second quarter of 2018. However, a decrease of 1% was recorded in the number of nights spent. Total guests and nights spent in Gozo and Comino decreased by 0.7% and 9.5%, to 28,191 and 89,728 respectively.

The average length of stay went down by 0.2 night to 4.9 nights in Malta, while in Gozo and Comino it also decreased by 0.3 night to 3.2 nights, when compared with the same quarter of the previous year. The net occupancy rate in Malta decreased by 1pp to 74.9%, in Gozo and Comino it decreased by 5.9pp to 48.5%.

Total guests dropped to 947,485 during January-June, with a decrease of 0.8% over the same period in the previous year. Total nights spent went down by 4%, reaching nearly 4.5m. The net use of bed-places declined by 3.1 pp to 61%. 

The full and detailed report is available for download at the website of NSO.

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