Economic growth remains unchanged in Q3

Economy posts another uninspiring print in Q3: According to a preliminary reading, the economy expanded 0.2% on a seasonally adjusted quarter-on-quarter basis in the third quarter. Q3’s reading matched Q2’s upwardly revised increase but fell short of the Euro area average of 0.4%. Meanwhile, year-on-year economic growth accelerated to 1.9% from 1.6% in the second quarter.

Contrasting dynamics continue in the quarter: According to the statistical office, Portugal’s economy continued to operate at two different speeds in quarterly terms: Though the external sector continued to detract from growth, this was largely offset by a positive contribution from domestic demand; in particular, the statistics office noted sturdy expansions in both private spending and fixed investment. A complete breakdown will be released on 29 November.

GDP growth to accelerate, though downside risks loom: Our panel expects sequential growth to be kicking into a higher notch in Q4, buoyed by ongoing monetary policy easing and low inflation. That said, the outlook is clouded by souring investor sentiment and increased political fragmentation in the run-up to the 2025 budget debates. After an expected slowdown overall in 2024, economic growth is expected to accelerate slightly next year.

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