Portugal: Second estimate confirms economy rebounded sharply in Q3, but strong momentum will not carry into Q4
November 13, 2020
A second GDP estimate released by the National Statistics Institute on 13 November showed the economy rebounded 13.3% in seasonally-adjusted quarter-on-quarter terms in Q3, after contracting 13.9% in Q2. In annual terms, GDP contracted 5.7% in Q3 (Q2: -16.4% year-on-year).
The reopening of the economy following the height of the pandemic in Q2 provided activity with renewed vitality in Q3. Internally, domestic demand increased 10.1% over the previous quarter in Q3, contrasting Q2’s 10.8% decline. Turning to the external sector, exports surged a whopping 38.8% on higher goods exports, after collapsing 37.0% in Q2. On the same note, imports surged 26.1% after falling 29.2% in Q2.
On to Q4, prospects are grim as surging Covid-19 cases have led to the reimposition of social-distancing measures. Most recently, a curfew was imposed until 23 November in 121 municipalities comprising 70% of the population. Taken together, the measures are set to cause severe harm to both private consumption and tourism.
Author: Frederico Teixeira de Abreu, Junior Economist