Portugal: GDP contracts in Q4 amid slumping investment
March 11, 2011
In the fourth quarter, GDP contracted a seasonally adjusted 0.3% over the previous quarter, according to the National Statistics Office (INE). The reading contrasted the 0.3% expansion recorded in Q3 and represented the only negative reading registered in 2010. On an annual basis, the economy grew 1.2% over the same quarter the year before (Q3: +1.4% year-on-year). The contraction in the fourth quarter reflected a 4.2% plunge in fixed investment (Q3: +0.8% quarter-on-quarter), while consumption expenditures rebounded into positive territory. Private consumption improved from the flat growth tallied in Q3 to a mild 0.1% expansion in Q4. Meanwhile, government consumption jumped 4.6%, after having shrunk 4.5% in Q3. Exports of goods and services deteriorated compared to the previous quarter, contracting 1.1% (Q3: +5.6% qoq), while imports improved to a 1.3% expansion (Q3: +0.7% qoq). As a result, the net contribution from the external sector to overall economic growth swung from plus 1.6 percentage points in Q3 to minus 0.2 percentage points in the final quarter of the year. Moreover, recent data point to a fragile economic growth at the outset of 2011, as industrial production rose a modest 0.9% in February over the same month last year (January: -0.7% yoy). At the current level, annual average growth in industrial output moderated from 1.4% in January to 1.2% in February.