Portugal GDP Q1 2018


Portugal: Economic growth slows at the outset of 2018

May 30, 2018

Detailed national accounts figures, released by the Statistical Institute on 30 May, confirmed that the economy lost pace in the first quarter of 2018, following the best quarter-on-quarter result since Q4 2016 in the previous quarter. Economic growth in quarter-on-quarter terms fell from 0.7% in Q4 2017 to 0.4% in Q1 2018.

Looking at a breakdown of the results, domestic demand growth accelerated from 0.3% quarter-on-quarter in the fourth quarter to 0.8% in the first quarter. Higher growth in private consumption and fixed investment underpinned the upturn. Private consumption rose 0.8% in Q1 2018, up from 0.4% in Q4 2017, while fixed investment climbed 1.8% in Q1 following a weaker 0.8% expansion in Q4, despite a slowdown in construction activity

The external sector, on the other hand, deteriorated markedly as exports slowed more notably than imports. Export growth plummeted in Q1, coming in flat after rising to 4.4% qoq in the previous quarter. Imports also grew at a slower rate, growing 0.6% qoq in Q1 2018 following an expansion of 3.2% qoq in Q4 2017.

Economic growth also lost momentum in annual terms: GDP expanded 2.1% year-on-year in the first quarter compared to 2.4% in the fourth quarter. Domestic demand contributed slightly more to growth in the quarter, while the external sector deducted more from growth.

While economic growth is expected to moderate from 2017’s 17-year high, it is expected to remain robust this year on the back of higher inflows of foreign investment, a flourishing tourism sector, the ongoing housing boom and continued solid employment generation.

Portugal GDP Forecast

The Bank of Portugal projects the economy will expand 2.3% in 2018 and 1.9% in 2019. FocusEconomics Consensus Forecast panelists expect GDP growth of 2.2% in 2018, which is up 0.1 percentage points from last month’s forecast, and 1.9% in 2019.


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Portugal GDP Chart

Portugal GDP Q1  2018 1

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

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