Portugal: Economy maintains firm pace of expansion in Q2
August 14, 2019
According to preliminary estimates released by the Statistical Institute (INE) on 14 August, the economy grew 0.5% in quarter-on-quarter, seasonally-adjusted terms in Q2, matching the previous quarter’s print. Meanwhile, economic growth, on an annual basis, remained steady at Q1’s 1.8% in the second quarter.
While a detailed breakdown has yet to be released, the preliminary estimate indicated that net external demand contributed positively to growth in Q2, while domestic demand faltered. Lower imports of capital goods signal fixed investment lost steam, while reduced purchases of consumer goods from overseas markets suggests private consumption remained downbeat. That said, consumer confidence improved in the quarter, albeit still stuck in negative territory nonetheless, signaling improved prospects for household spending. Meanwhile, external headwinds weighed more heavily on exports, which contracted more sharply in the quarter. Nevertheless, the external sector’s contribution to growth was positive thanks to a faster deceleration in imports.
Looking ahead, the economy is seen losing pace this year owing to a less supportive external environment and softer growth in household spending amid a downturn in economic sentiment. Nevertheless, the rollout of several delayed investment projects should cushion the slowdown in domestic demand.
Author: Nihad Ahmed, Economist