Portugal: Economy slows in the third quarter
November 29, 2019
Detailed national accounts released on 29 November confirmed that the economy grew 0.3% in quarter-on-quarter, seasonally-adjusted terms in Q3 (Q2: +0.6% qoq). Meanwhile, in annual terms, GDP was up 1.9% in the third quarter, matching the print of the previous quarter.
On the domestic front, private consumption expanded 1.1% in the quarter after rising 0.6% in Q2, amid less pessimistic consumer sentiment and milder price pressures. However, government expenditure remained subdued by ongoing fiscal consolidation measures (Q3: +0.1% qoq; Q2: +0.1% qoq). Fixed investment fell at a sharper rate, dropping 1.4% in Q3 after declining 0.1% in Q2.
On the external front, net exports deducted 0.6 percentage points from growth in Q3, following a neutral contribution in the second quarter. Exports fell 0.8% (Q2: -0.2% qoq) against a challenging trade backdrop. Contrastingly, imports expanded 0.7%, rebounding from a 0.1% contraction in the previous quarter, and reflecting Q3’s uptick in domestic demand.
Looking ahead to next year, the economy is projected to lose some steam as domestic demand and export growth moderate. However, industrial production is projected to rebound, while strong real gains in disposable income and a resilient labor market should support private consumption.
Author: Stephen Vogado, Economist