GDP falls 3% in 2021 because of lockdown
As was expected, Portugal’s economy contracted in the first three months of 2021 with GDP falling 3.3% (compared to the fourth quarter in 2020). In like-for-like terns the fall was 5.4%
However, the second confinement had less impact on the Portuguese economy than the first, according to a snapshot estimate by the National Statistics Institute (INE) which was released on Friday.
In the fourth quarter of 2020, GDP had grown by 0.2% on the previous quarter (Q3 of 2020) which meant that Portugal’s economy began to recover in the second half of 2020 following the contraction caused by the first lockdown in 2020 from March to May.
However, it fell 6.1% in like-for-like terms overall on 2019 with GDP for the whole of 2020 falling 7.6%, the largest fall in Portugal’s democratic history.
The government’s expectation was that GDP would recover 4% in 2021, benefiting from a strong rebound from the second quarter.
“The GDP in real terms saw a like-for-like variation of -5.4% in the first quarter of 2021 (-6.1% on the previous quarter), reflecting the effects of the lockdown decreed at the beginning of the year as the Covid-19 crisis got worse” states the INE.
The INE estimates that in consecutive quarterly terms, internal demand and net external demand (exports) saw a negative GDP balance, being “particularly intense” in the case of internal demand because of the limitations placed on mobility during the second confinement.
However, data for international trade in the first quarter were surprisingly positive in an otherwise bleak landscape, with an improvement in net external demand with exports of goods increasing 6% between January and March 2021 compared to the same period last year, while imports fell 5.7%.