Lisbon, Portugal street

Portugal GDP Q1 2023

Portugal: GDP records fastest expansion since Q1 2022 in the first quarter

GDP growth gathered steam to 1.6% on a seasonally adjusted quarter-on-quarter basis in the first quarter, from 0.3% in the fourth quarter of last year. Q1’s reading marked the strongest expansion since Q1 2022.

Household spending bounced back as inflation eased during the period, growing 0.4% seasonally adjusted quarter-on-quarter in Q1 compared to a 0.5% contraction in Q4. Public spending, meanwhile, dropped at the sharpest pace since Q2 2022, contracting 0.3% (Q4 2022: +0.8% s.a. qoq). Moreover, fixed investment was down 0.8% in Q1, contrasting the 3.6% increase in the prior quarter. All in all, domestic activity detracted 0.8 percentage points from the headline reading, down from the 0.6 percentage point contribution in the prior quarter.

On the external front, exports of goods and services bounced back, growing 6.8% seasonally adjusted quarter on quarter in the first quarter, which marked the best reading since Q4 2021 (Q4 2022: -0.1% s.a. qoq). The improvement came on the back of a stronger tourism sector. Meanwhile, imports of goods and services growth picked up to 1.3% in Q1 (Q4 2022: +0.4% s.a. qoq). The external sector was the sole engine of growth in Q1, contributing 2.5 percentage points, up from a 0.2 percentage point detraction in the previous period.

On an annual basis, economic growth slowed to 2.5% in Q1, following the previous period’s 3.2% increase. The annual slowdown was chiefly driven by a high base of comparison.

Shifting to the current quarter, early data points to a slowdown. Both retail sales and industrial output declined in month-on-month terms in April. Additionally, the all-important tourism sector fared worse at the outset of the quarter: Tourism arrivals growth slowed in April relative to Q1’s average.

Looking at H2, activity is set to remain subdued as depleted savings and above-target inflation will constrain private spending, while tighter financing conditions will weigh on investment. Key factors to monitor are the summer tourism season and the pace of execution of investment projects related to EU recovery funds.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest