Bermuda's balance of payments position on current account worsened in the third quarter of 2002, suggesting that the Island will end the year with a smaller surplus than in 2001.

For the three months ending on September 30, the Island recorded a current account balance of payments surplus of $37 million, down 26 percent or $13 million from the $50 million recorded in the same period in 2001.

For the year to date, the Island had a current account balance of payments surplus of $60 million compared to a surplus of $171 million for the same nine month period in 2001.

Balance of payments measures how much money a country takes in in receipts for trade, exports, travel and investment income against how much it spends buying the same products overseas.

Bermuda's balance of payments took a hit in the fourth quarter of 2001 in the wake of the September 11 terrorist attacks and it is possible that the 2002 fourth quarter will be better.

But the total balance of payments for 2001 was a surplus of $145 million, meaning the fourth quarter of 2002 would have to produce a surplus of $85 million to match it.

The major changes in payments abroad in the third quarter came in imports of merchandise which jumped $20 million to $183 million in the quarter and in other goods, services and income, which rose $8 million to $77 million. Total payments rose $32 million to $468 million for the quarter.

Receipts rose by $19 million to $505 million for the quarter. Travel receipts (largely from tourism) rose by $9 million to $137 million but investment income slumped from $44 million to $25 million as plunging world stock markets continued to affect local investors.

Receipts for professional managerial and technical services rose $19 million from $265 million to $284 million, suggesting continued strength in international business.

That strength was also indicated to some extent by a rise in company formations in the quarter which increased from 330 in the second quarter of 2002 to 339 in the third quarter.

However the number of incorporations were down year over year, with 376 new incorporations in the third quarter of 2001, 37 more than in the same period in 2001.

And incorporations also continued to lag for the first nine months of the year with 1,041 incorporations compared to 1,263 in the first nine months of 2001.

There were 19 additions to the insurance register in the quarter.

In spite of the weak investment climate, Bermuda also continued to attract mutual funds and unit trusts, with 1,590 on the Island's register by the third quarter of 2002, up from 1,530 in the second quarter and 1,350 in the the third quarter of 2001.

However, the funds' net asset value fell from $64.16 billion in the second quarter of 2002 to $61.26 billion in the third quarter. In the third quarter of 2001, the funds had a NAV of $9.45 billion.