Portugal GDP Q1 2016


Economy maintains pace of expansion revised data shows

According to revised data released by the statistical office on 31 May, Portugal’s GDP increased a seasonally-adjusted 0.2% in Q1 over the previous quarter, which followed a similar expansion in Q4. The reading was revised slightly up from the flash estimate that had GDP growing 0.1%. Still, Q1’s result fell short of the 0.4% expansion the markets had expected. On an annual basis, GDP expanded 0.9% in Q1 (previously reported: +0.8% year-on-year), which came in below the 1.3% increase observed in Q4.

Looking at the GDP components, private consumption government spending continued to support economic activity, while a contraction both in fixed investment and exports of goods and services dragged on growth. Private consumption surged 1.3% over the previous period in Q1, which was well above the 0.1% rise tallied in Q4. The reading marked the fastest increase in one and a half years. Government spending grew 0.3% in Q1, which was up from the 0.1% increase observed in Q4. Conversely, gross fixed investment decreased 1.2% in the first quarter, which came in below a 0.2% increase in Q4.

On the external front, exports of goods and services contracted 0.7% in the first quarter, which contrasted the 1.9% rise observed in the final quarter of 2015. Growth in imports only decelerated from 1.7% in Q4 to 1.0% in Q1. Consequently, net exports dragged 0.7 percentage points to overall economic growth in the first quarter, which marked a deterioration compared to the fourth quarter, when the contribution was flat.

The Bank of Portugal expects the economy to expand 1.5% this year, which is less optimistic than the government’s forecast of 1.8% stipulated in the 2016 budget. For 2017, the Bank foresees the economy growing 1.7%. FocusEconomics Consensus Forecast panelists expect GDP to expand 1.3% in 2016, which is unchanged from last month’s projection. For 2017, the panel foresees the economy growing 1.6%.

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Portugal GDP Chart

Portugal GDP Q1 2016 0

Note: Year-on-year and annual average variation in %.
Source: Statistics Portugal (INE) and FocusEconomics calculations.

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