Portugal: Economic recovery gains traction in Q4
March 11, 2014
GDP expanded a seasonally-adjusted 0.6% over the previous quarter in Q4 (Q3: +0.3% quarter-on-quarter) according to detailed data published by Statistics Portugal on 11 March. The print slightly overshot the 0.5% increase reported in the preliminary estimate and marked the third consecutive expansion in national output. On an annual basis, the economy increased a robust 1.7% in Q4, which contrasted the 0.9% decline tallied in Q3 and represented the fastest pace of expansion since Q3 2010. According to Statistics Portugal, the Q4 expansion reflects a strong improvement in the external sector, while domestic demand deteriorated. Private consumption contracted 0.5% over the previous quarter (Q3: +1.2% qoq), whereas government spending expanded at the fastest pace in three years (Q3: -0.5% qoq; Q4: +1.2% qoq). Gross fixed investment improved from a 1.5% increase in Q3 to a 3.4% expansion in Q4, marking the highest rate in six years. In contrast, the external sector's net contribution to overall growth improved markedly, swinging from minus 1.1 percentage points in Q3 to plus 0.2 percentage points in Q4. Exports of goods and services rose 1.0% over the previous quarter (Q3: +0.3% qoq), while imports slowed to a 0.5% increase (Q3: +3.0% qoq). The Bank of Portugal expects the economy to expand 0.8% in 2014 and 1.3% in 2015. FocusEconomics Consensus Forecast panelists expect that GDP will expand 0.9% in 2014, which is up 0.2 percentage points from last month's projection. For 2015, the panel expects economic growth to accelerate to 1.3%.