The Central Bank of Malta has recently posted on its website what it called ‘a supplement’ to its already-issued Quarterly Review for the third quarter of 2013.

It makes for interesting reading, especially when one compares it to what the Quarterly Review had to say on the same subject with regards to the second quarter of 2013..

The following is what the Supplement had to say:

On 9 December 2013, the National Statistics Office published gross domestic product (GDP) estimates for the third quarter of the year.

The annual rate of growth of real GDP slowed down to 1.9% in the third quarter of 2013, from 3.3% in the previous quarter.

The latter was revised down from the previous estimate of 3.6%. In quarter-on-quarter terms, seasonally adjusted real GDP contracted by 0.4% in Malta after having increased by a relatively strong 2.0% in the second quarter.

In the euro area as a whole, economic activity increased by 0.1% during the third quarter.

In the third quarter of 2013 both exports and imports rose compared to a year earlier. Net exports remained positive and were slightly higher compared to the third quarter of 2012, as the increase in exports, in absolute terms, exceeded that in imports. They contributed 0.1 percentage points to real GDP growth. Following a sharp annual fall in the previous quarter, exports increased by 2.4% on a year earlier. Sales of goods drove export growth, while exports of services also increased. Imports also rebounded, going up by 2.6% on a year earlier. Imports of both goods and services went up compared with the third quarter of 2012, with the rise mainly due to increased imports of goods.

Domestic demand increased in annual terms, following a drop in the previous quarter, raising real GDP growth by 1.8 percentage points. This was mainly due to developments in inventory changes, though private consumption also contributed. With changes in inventories and acquisitions, which include the statistical discrepancy, less negative compared to a year earlier, they boosted GDP growth by 2.5 percentage points.

Meanwhile, private consumption was up by 0.5% on a year earlier, with its contribution to GDP growth standing at 0.3% of a percentage point.

In contrast, investment continued to fall during the third quarter of 2013. Gross fixed capital formation decreased by 6.2% on a year earlier, matching the decline recorded three months earlier. The drop in investment reflected lower spending on non-residential construction, transport and machinery. Dwelling investment picked up, however.

After having expanded in the previous quarter, government consumption fell by 1.2% on a year earlier. The drop in government consumption during the third quarter of 2013 partly reflected a reduction in intermediate consumption, while compensation of employees continued to grow.

And this is what the Quarterly Review had to say about the same subject with regards to the second quarter:

Economic activity in Malta continued to expand in the second quarter of 2013, with annual gross domestic product (GDP) growth accelerating to 3.6% from 1.8% in the previous quarter. Net exports were the main source of economic growth as domestic demand contracted. On a quarterly basis, seasonally-adjusted data indicate that the Maltese economy expanded by 1.8%, up from 0.2% in the previous quarter. This compares with 0.3% growth in the euro area.

During the period under review net exports contributed 7.9 percentage points to the annual rise in GDP. While both exports and imports registered negative growth, imports declined at a much faster rate than exports.

On an annual basis real exports were 8% lower in the second quarter of 2013. This resulted from lower merchandise sales, which dropped by nearly 17% compared with the same quarter of 2012. Conversely, exports of services increased by 11.1% in the same period. In nominal terms, Customs data indicate that the drop in goods exports was mainly due to lower oil re-exports. In fact, non-fuel exports were higher on an annual basis. The largest absolute increases were recorded in exports of food, chemicals and machinery & transport equipment. Over the same period, higher exports of services mainly reflected the buoyant performance of the tourism industry.

The fall in exports, together with lower domestic demand, led to a sharp reduction in imports during the quarter reviewed. The latter declined by 14.8% in real terms, with both goods and services contracting on an annual basis by 21.6% and 1.3% respectively.  The impact of the drop in imports was to boost real GDP growth by 17.4 percentage points. Customs data show that in nominal terms imports of goods were lower across all main components except oil. The most notable declines were in imports of machinery & transport equipment and food. Imports of services remained practically unchanged in the second quarter of 2013 on a year earlier.

Domestic demand weakened in the second quarter of the year, reversing the positive performance observed in the previous quarter. In fact, domestic demand had an adverse impact of 4.2 percentage points on real GDP growth on account of negative changes in inventories, lower investment and lower private consumption. Government consumption expenditure was the only component of domestic demand to register growth.

Private consumption fell for the second consecutive quarter by 1.6%. It contributed a negative 1 percentage point to real GDP growth. Lower expenditure on clothing & footwear and transport were key factors behind teh decline.

Meanwhile, government consumption recovered and rose by 3.5% after having declined in the previous quarter. It contributed 0.7 of a percentage point to GDP growth. In nominal terms, payments in connection with the compensation of employees were the largest contributor to the increase in government consumption, though intermediate consumption also rose. At a sectorial level, education and health, which absorb the largest amount of government consumption expenditure, also recorded the highest increase during the second quarter.

Gross fixed capital formation fell for the fourth consecutive quarter, dropping at an annual rate of 13.5% in the second quarter. Its contribution to GDP growth was a negative 1.9 percentage points. Investment in real terms fell across all sectors except those involving IT and related services. The largest fall was recorded in construction-related activity, both in the residential and non-residential category.

Nominal data indicate that both private and government investment were lower in the second quarter. In the case pf general government investment, the decline was mainly related to transport equipment and non-residential construction. Where the private sector was concerned, the contraction was reflected in the machinery and residential construction categories. However, private investment outlays on IT and related products and on transport equipment were higher.

Changes in inventories turned negative in the second quarter of the year and dragged down real GDP growth by 2.1 percentage points. These were equivalent to -0.2% of real GDP.