Portugal: Economy loses steam in Q2
According to a preliminary reading, the economy expanded 0.1% on a seasonally adjusted quarter-on-quarter basis in the second quarter. Q2’s reading was a far cry from the 0.8% expansion tallied in the first quarter and fell short of the Euro area average of 0.3%.
Meanwhile, economic growth in year-on-year terms was steady at Q1’s 1.5% in the second quarter.
According to the statistical office, Portugal’s quarterly slowdown largely reflected a negative contribution from the external sector, as exports of goods and services flatlined in Q2. More positively, domestic demand—which had detracted from GDP in the prior quarter—limited the deterioration; a rebound in fixed investment outweighed a deceleration in private spending.
A complete breakdown will be released on 30 August.
Our panel expects sequential growth to gain traction in the third quarter, underpinned by receding price pressures and ongoing monetary policy easing. That said, our Consensus is for the economy to lose momentum this year as a whole from 2023 due to a tight monetary policy backdrop. Rising political fragmentation is a downside risk.