Portugal GDP Q4 2020


Portugal: Growth slows in Q4, but economy remains resilient

February 26, 2021

According to a second estimate released on 26 February, GDP growth lost steam in the final quarter of 2020, falling to 0.2% on a seasonally-adjusted quarter-on-quarter basis (previously reported: +0.4%) from 13.3% in the third quarter, as the progressive tightening of Covid-19 restrictions weighed on momentum.

The downturn was broad-based, with private consumption, public spending, fixed investment and exports all weakening. Private consumption fell 0.5% in the fourth quarter, contrasting the third quarter's 12.7% expansion, while public spending growth slowed to 1.1% (Q3: +7.7% s.a. qoq). Meanwhile, fixed investment swung to contraction, falling 0.2% and contrasting the 9.7% expansion logged in the prior quarter.

Growth in exports of goods and services moderated to 6.2% in Q4 (Q3: +39.8% s.a. qoq). Similarly, growth in imports of goods and services softened to 6.0% in the quarter (Q3: +27.2% s.a. qoq).

On an annual basis, GDP fell at a more pronounced pace of 6.1% in Q4, down from the previous quarter’s 5.7% contraction. As a result, the economy contracted 7.6% over 2020 as a whole—matching the flash reading—contrasting 2.5% growth in 2019.

Moving forward to the new year, the imposition of a lockdown on 15 January spells trouble for activity in the first quarter. Looking at 2021 as a whole though, the economy should benefit from a rebound in private consumption, exports and fixed investment as vaccines are rolled out, restrictions eventually loosen and travel gradually recovers. Higher government spending should provide further support.

On the outlook for 2021, Maddalena Martini, economist at Oxford Economics, commented:

“We expect economic activity to fall again in Q1, with GDP shrinking by 1.7% q/q. But for 2021 overall, we see the economy rebounding to 4.1% growth, supported by the vaccine rollout, the gradual economic reopening in H2, and the contribution of EU funds.”

On fiscal support, she added:

“The government recently extended measures to support the economy. These include additional spending for the national health system, financial support for temporarily furloughed employees, state-backed credit guarantees for small and midsize enterprises, and a deferral of social security payments. Together with European aid and the Next Generation EU funds, these measures will help cover economic losses and support Portugal’s recovery.”

FocusEconomics Consensus Forecast panelists see GDP climbing 4.5% in 2021, which is down 0.3 percentage points from last month’s forecast. In 2022 the economy is seen growing 4.4%.

Author:, Junior Economist

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Portugal GDP Chart

Portugal GDP Q4  20 20 5

Note: Quarter-on-quarter and year-on-year changes in GDP in %.
Source: Statistics Portugal (INE) and FocusEconomics calculations.

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