Portuguese economy shows positive signs
Despite uncertainty, indicators show that Portugal’s economy is fairing better than expected in terms of trade and GDP for the first quarter of 2023.
The fall in energy prices has helped Portugal’s overseas balance, increasing the confidence of families, while more tourists are visiting the country.
Challenges such as high inflation, and a tightening of credit conditions to families and companies, persist, but signs of greater overseas demand and continued demand in some areas of Portugal’s internal market are making a positive contribution of GDP, which had remained muted because of inflation.
After the Bank of Portugal (BdP) had revised its growth forecasts upwards to 1.8% in its March economic bulletin, Lisbon’s Catholic University (Católica) also revised Portugal’s growth upwards on Wednesday by 0.5% to 1.4%, a trend likely to be followed by ISEG – Lisbon School of Economics and Management, which in February forecast a GDP of 1.6%.
“This year got off to a better start than expected”, said João Borges de Assunção, a NECEP economist at Católica who expects an 0.5% increase in GDP for the first quarter. (The forecast had been a fall of -0.5% in mid January)
“I would not change (my opinion) over the overall fragility of the economy for the year, but the more pessimistic forecasts for the start of the year have proved unfounded”, he said.
However, some indicators such as industrial production and sales of cement still suggest a fairly weak performance in the first quarter.
There is also some improvement in consumer confidence indices which nevertheless remain at historically low levels.
However, some upbeat signs from investment and private consumption are still too weak to make a solid evaluation. “The Portuguese economy is generally never that far out of step with the Euro Zone, and so with the slightly more favourable signs in European economies, particularly Germany, for the first quarter, may be enough to support growth, albeit timid”, says Borges de Assunção in statements to Negócios.
ISEG economist António Ascensão Costa adds, “With the data that we have, perhaps a like-for-like growth of around 2% for the first quarter is possible”.
Photo: Port of Leixões, Porto. DR Porto de Leixões APDL.