Portugal: Q2 GDP contraction confirmed
September 7, 2012
In the second quarter, GDP declined a seasonally adjusted 1.2% over the previous quarter, according to data released by the National Statistics Office (INE, Instituto Nacional de Estatistica). The reading confirmed the 14 August flash estimate and was well below the 0.1% contraction seen in the first quarter. On an annual basis, the economy declined 3.3% in Q2, a deterioration over the 2.3% drop recorded in the first quarter. The second quarter result was driven by a marked deterioration in the domestic sector on the back of a plunge in investment, whereas the external side of the economy improved over the previous period. Total consumption declined a softer 0.6% over the previous quarter (Q1: -1.7% quarter-on-quarter) aided by a softer contraction in both private consumption (Q1: -2.1% qoq; Q2: -0.7% qoq) and government consumption (Q1: -0.6% qoq; Q2: -0.1% qoq). On the other hand, gross fixed investment swung from a 3.1% expansion in the first quarter to a whopping 10.3% drop in the second. The external sector, however, improved as exports outpaced imports. Shipments of goods and services expanded 0.7% over the previous quarter (Q1: +2.1% qoq), while imports swung from a 2.0% expansion in the first quarter to a 3.3% contraction. As a result, the external sector's net contribution to overall economic growth swung from minus 0.1 percentage points in the first quarter to plus 1.5 percentage points in the second. The government maintains its forecast of a 3.0% economic contraction for this year, but recently revised its 2013 forecast from a 0.2% expansion to a 1.0% contraction.