Economic slowdown spreads to Lisbon

By TPN/Lusa, in Business · 22-11-2019 01:00:00 · 0 Comments
Economic slowdown spreads to Lisbon

Economists consider that the slowdown of the Portuguese economy in the third quarter, when compared to the previous three months, with GDP growing by half, is a reflection of the deceleration of the European economy.

“The slowdown of the European economy seems to be spreading to Portugal, after a first half in which this effect was not yet evident”, indicates the Católica Lisbon Forecasting Lab/NECEP in the quick reading of the first estimate of the National Institute of Statistics (INE) released on the National Accounts in the third quarter.


Filipe Garcia, an economist at IMF - Financial Markets Information, told Lusa that “we can already see the contagion effect of some European countries, namely Spain, Germany and the United Kingdom, with the uncertainty regarding the ‘Brexit’ which has also weighed on Portuguese exports”.


In the same vein, Nuno Caetano, an analyst at Infinox, told Lusa that the evolution of GDP in the third quarter “is largely due to the fact that European growth is slowing down (despite the fact that Germany has surprised everyone with its Gross Domestic Product figures), with most national exports going to the old continent”.


Nuno Caetano also indicated that the data released on GDP “is also a consequence of the impact of the high uncertainty of issues related to international trade”.


The INE revealed that the GDP grew 0.3 percent in the third quarter, compared to the previous three months, half of the 0.6 percent expansion registered in both the second and first quarter of the year.


Católica indicates that this is the “weakest record since the second quarter of 2016”.


In year-on-year terms, GDP grew 1.9 percent in the third quarter compared to the same period last year, the same pace of growth recorded between April and June.


The NECEP [Centre for Economic Studies of the Portuguese Economy] also said in the note sent to Lusa that “the loss of dynamism of both exports and investment, if confirmed in the data, would be worrying and would condition the prospects for growth in the medium term”.


“The recovery of the Portuguese economy started in 2013 is still underway, although now with signs of slowing down”, NECEP also mentions in its analysis, adding that its central scenario, which forecasts growth of 2.1 percent this year, “has become less plausible, with growth prospects remaining around 2 percent”.


On the other hand, Filipe Garcia anticipates a growth of “1.9 percent, 1.8 percent this year” and, for 2020, does not foresee “a deep stop”.


“I would even say that the darkest clouds have dissipated in recent weeks. Germany’s figures are not so bad, there are prospects for some trade agreement between the United States and China and ‘hard Brexit’ will probably be avoided,” said the IMF economist.


Nuno Caetano, of Infinox, considers that “it is possible to meet the growth target of 1.9 percent for the year as a whole if there is a growth of 0.1 percent in the last quarter of the year”.


The Government forecasts that the economy will grow 1.9 percent this year, the same estimate of the International Monetary Fund (IMF) and the Council of Public Finance.


Last week, the European Commission improved by three tenths Portugal’s economic growth forecast to 2 percent this year, a tenth above that expected by the Government (1.9 percent), in line with the estimate of the Bank of Portugal.



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