Portugal: GDP expands at highest level since Q1 2007
September 6, 2013
In the second quarter, GDP expanded a seasonally-adjusted 1.1% over the first quarter, according to detailed data published by Statistics Portugal on 6 September. The increase contrasted the 0.4% drop seen in the first quarter and was on par with the preliminary estimate. The reading represents the first expansion since Q4 2010 and the highest level since Q1 2007. On an annual basis, the economy declined 2.1% in Q2, an improvement over the 4.1% drop recorded in the previous quarter.
According to Statistics Portugal, the second quarter expansion reflects a broad-based improvement. Domestic demand expanded 0.8% quarter-on-quarter in Q2, jumping up from the 2.1% contraction recorded in Q1. The improvement came on the back of an expansion in total consumption (Q2: +0.3% qoq, Q1: -0.8% qoq). In addition, total investment increased in the second quarter (Q2: +3.3% qoq, Q1: -8.9% qoq) supported by the sharp restocking process. Gross fixed investment improved from a 2.8% decline in Q1 to a 0.1% contraction in Q2.
In contrast, the external sector's net contribution to overall growth deteriorated from 1.7 percentage points in Q1 to 0.3 percentage points in Q2. Exports of goods and services rose 5.2% over the previous quarter (Q1: +2.6% qoq), while imports expanded 4.5% (Q1: -1.8% qoq).
The Bank of Portugal expects the economy to contract 2.0% this year and to rebound to 0.3% growth in 2014. FocusEconomics Consensus Forecast panelists anticipate that GDP will contract 2.5% in 2013, which is unchanged from last month's projection. For 2014, the panel sees GDP to expand 0.3%.
Author: Dirina Mançellari, Senior Economist