Portugal: Economic growth is flat in Q2
GDP growth flatlined on a seasonally-adjusted quarter-on-quarter basis in the second quarter, below the 2.5% expansion tallied in the first quarter. Q2’s reading marked the worst reading since Q1 2021.
Decades-high inflation led to a 0.3% contraction in private consumption in Q2, which was the worst result since Q1 2021 (Q1: +1.7% s.a. qoq). Government consumption also deteriorated, shrinking by 0.4% in Q2 (Q1: +1.2% s.a. qoq). Meanwhile, fixed investment contracted 4.4% in Q2, marking the least favorable reading since Q2 2020 (Q1: +3.4% s.a. qoq).
More positively, exports of goods and services growth improved to 4.7% in Q2 (Q1: +2.0% s.a. qoq). In addition, imports of goods and services growth picked up to 2.2% in Q2 (Q1: +1.0% s.a. qoq).
On an annual basis, economic growth moderated to 7.1% in Q2, from the previous period’s 11.8% expansion. The result was partly due to a tougher base of comparison.
Analysts at EIU commented on Portugal’s prospects:
“The outlook is reasonably positive for the third quarter but is likely to deteriorate in the final three months of 2022 and in 2023 if, as we expect, there is an energy crunch across Europe during the 2022/23 winter. […] The main driver of third-quarter growth will be the strong recovery in the tourism sector, which accounted for about 17% of GDP, including indirect effects, before the pandemic.”