Portugal GDP


Recession eases on improving external sector

In the fourth quarter, GDP declined a seasonally adjusted 0.4% over the previous period, according to detailed data published by Statistics Portugal on 5 June. The contraction exceeded the 0.3% drop reported in the flash estimate but marked an improvement compared to the 1.8% decline seen in the fourth quarter of 2012. Moreover, the reading represents the mildest contraction recorded in one year. On an annual basis, the economy declined 4.0% in Q1, a deterioration over the 3.8% drop recorded in the last quarter of 2012.

According to Statistics Portugal, the first quarter reading reflects an improving external sector, whereas domestic demand deteriorated further. Private consumption fell a softer 0.7% over the previous quarter (Q4 2012: -2.4% quarter-on-quarter), whereas government spending deteriorated over the previous period (Q4: -0.6% qoq; Q1: -1.1% qoq). Meanwhile, gross fixed investment declined 2.8% in the first quarter (Q4: -4.4% qoq). Moreover, GDP was negatively affected by a sharp downward shift in inventories, which drove total investment down.

On the other hand, the net contribution from the external sector improved markedly from a 0.5 percentage-point detraction in Q4 to a 1.9 percentage-point contribution in the first quarter. Exports of goods and services rose 2.6% over the previous quarter (Q4: -1.8% qoq), while imports contracted 2.5% (Q4: -0.5% qoq).

The Bank of Portugal expects the economy to contract 2.3% this year and to rebound to 1.1% growth in 2014. FocusEconomics Consensus Forecast panellists anticipate that GDP will contract 2.5% in 2013, which is unchanged from last month's projection. For 2014, the panel anticipates GDP to expand 0.3%.

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Portugal GDP Chart

Portugal GDP Q1 2013

Note: Quarter-on-quarter changes of seasonally adjusted GDP and year-on-year variation in %.
Source: Statistics Portugal (INE) and FocusEconomics Consensus Forecast.

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