Portugal’s gross domestic product in the second quarter expanded 0.6 percent, and was up 0.8 percent on a year earlier, according to preliminary figures released by the National Statistics Institute (INE). The government hailed the expansion as vindicating its policies of the past three years while
opposition parties said the growth target for the year was out of reach.
The INE flash estimate published last Thursday shows year-on-year economic growth decelerating, since in the previous quarter it had been 1.3 percent, despite the economy having shrunk 0.6 percent in that first quarter.
According to the institute, the slowdown in the growth rate was largely due to investment dropping off, while demand for Portuguese goods and services from customers abroad picked up.
“Domestic demand presented a less intense positive contribution to the year-on-year change in GDP in the second quarter, reflecting above all the development of investment,” the INE statement said. On the other hand, it added, “net foreign demand registered a less significant negative contribution ... due to the slowdown in imports of goods and services, while exports of goods and services decelerated.”
In the quarterly increase in GP, exports were the main contributor, according to the INE.
A spokesman for Portugal’s government welcomed the latest GDP figures as showing that its work “has brought results” and that the economy “is holding up well” in adversity, in contrast to forecasts by those he said “rushed to say that Portugal was on the verge of recession” as a result of the government’s austerity policies. Speaking after Thursday’s cabinet meeting, Luís Marques Guedes noted that GDP grew above the European Union average, and that neighbouring Spain, which is one of Portugal’s most important markets, also continues to enjoy growth.
According to a report issued on Thursday by the Economic Studies Centre at Lisbon’s Catholic University, the latest INE figures confirm that recovery “is underway, although at a still very tenuous rate.” It noted that the 0.6 percent quarterly growth is the second largest since the second quarter of last year, when the current recovery began.
The crisis at Banco Espírito Santo, which has now been wound up, the university’s experts noted, “does not seem to have had any measurable effect on the second-quarter national accounts despite the large losses announced”. They added that an impact could not be ruled out in the coming quarters.
Opposition politicians seized on the slowdown in growth as undermining the government’s argument that it had overseen an “economic miracle”, in the words of José Lourenço, deputy for the Communist Party. Above all, he told Lusa, it “inevitably” brings into question the government’s growth target for this year.
The government currently forecasts GDP growth for the year as a whole of 1.2 percent; in the state budget it had foreseen just 0.8 percent. Last year the economy shrank by 1.4 percent, in 2012 by 3.2 percent and in 2010 by 1.3 percent.
The slowdown in Portugal’s year-on-year growth in the quarter echoed developments elsewhere in the euro zone and in the European Union as a whole, according to figures released on Wednesday by Eurostat, the EU’s statistical arm. Year-on-year growth in the euro zone was 0.7 percent, compared with 0.9 percent in the first quarter; in the EU as a whole, year-on-year growth slowed to 1.2 percent from 1.4 percent.
The Eurostat figures show euro-zone GDP stagnating in the second quarter as compared to the first, after expanding 0.2 percent in that period. In the EU as a whole, GDP expanded 0.2 percent in the quarter, compared to 0.3 percent growth in the first.