INE confirms: GDP grew 1.6%. External demand gave it a boost

  • ECO News
  • 1 December 2016

When compared to April and June, to great surprise, GDP grew to 0.8%. It increased as well when compared to the third quarter of 2015, reaching 1.6%.

After the quick estimate made on November 15, the confirmation arrived this Wednesday: the economic growth rhythm in Portugal had not been this expressive since the last three months of 2013. The data brought forward by the Portuguese National Statistical Institute (INE) confirms GDP grew to 0.8% in the third trimester of 2016, when compared to the months between April and June. The homologous growth was of 1.6%.

Source: INE (quarter and percentage values). Third quarter values correspond to the quick estimate.

This increase is justified mainly by net exports, with an expressive acceleration in the export on goods and services in comparison to imports. “The higher GDP growth mainly reflected the increase of net external demand, moving from 0.1 percentage points (p.p) in the second quarter to 0.7”, writes the INE in the Quarterly National Accounts.

For that aim, the acceleration on the export of services has been a great contribution, since the homologous increase was of 4.4% (-0.2% in the second quarter). As for exports of goods, they have “shifted from a year-on-year change rate of 2.5% in the previous quarter to 5.7%, influenced by the sale of military equipment in 0.6 p.p”, the report explains. Overall, exports have shifted from a homologous variation of 1.8% in the second trimester to 5.4% in the third trimester.

But that is not the only explanation. Private consumption, which has improved as far as non-durable goods and services, has also helped boost the GDP: “The contribution of domestic demand to the GDP year-on-year change rate slightly increased, moving from 0.8 percentage points in the previous quarter to 0.9, mainly reflecting the more intense growth of private consumption”, the INE explains. Within private consumption, the “acceleration of Final Consumption Expenditure of Resident Households to 1.9% (1.6% in the previous quarter)” played a crucial role.

On the other hand, “in the opposite direction, expenditure of durable goods has slowed down, shifting from a year-on-year growth rate of 7.9% in the second quarter to 6.2% reflecting, to a large extent, the evolution of the motor vehicles component”, the INE’s report explains.

The document also points out that “in the third quarter 2016, Investment recorded a more negative year-on-year change rate of -3.1% in volume (-2.3% in the previous quarter)”. By contrast, the contribution of net external demand was even more positive due to the increase in exports and the decrease in imports.

The INE states: “Comparing with the flash estimate previously released for the third quarter, the new data implied no revisions on the GDP year-on-year and quarter-on-quarter change rates”.

Source: INE (percentage values).