Portugal: Q4 GDP contraction confirmed
March 11, 2013
In the fourth quarter, GDP declined a seasonally adjusted 1.8% over the previous quarter, according to detailed data published on 11 March. The contraction, which matched the flash estimate, doubled the 0.9% decline seen in the third quarter. On an annual basis, the economy declined 3.8% in Q4, a deterioration over the 3.5% drop recorded in the third quarter. As a result, GDP contracted 3.2% in 2012, doubling the 1.6% decline registered in 2011.
According to Statistics Portugal, the fourth quarter reading reflected a more negative contribution of domestic demand to overall growth. Total consumption fell a sharper 2.0% over the previous quarter (Q3: -0.7% quarter-on-quarter) driven by a larger contraction in private consumption (Q3: -0.3% qoq; Q4: -2.3% qoq), whereas government consumption improved somewhat (Q3: -1.9% qoq; Q4: -1.1% qoq). In addition, gross fixed investment swung from a 0.5% increase in the third quarter to a notable 5.1% drop in the fourth.
The net contribution from the external sector was also negative. Exports of goods and services contracted 2.1% over the previous quarter (Q3: 0.0% qoq), while imports swung from a 1.8% expansion in the third quarter to a 1.4% contraction in the fourth.
The Bank of Portugal expects the economy to contract 1.9% this year and to rebound to a 1.3% expansion in 2014. FocusEconomics Consensus Forecast panellists anticipate that GDP will contract 2.1% in 2013, which is down 0.1 percentage points from last month's projection. For 2014, the panel anticipates GDP to expand 0.2%.