INE confirmed the slowdown of the economy in the third quarter to 0.3%, the lowest pace of growth since the second quarter of 2016. Consumption saves the economy from stagnation.
The National Statistics Institute confirmed this Friday that the economy grew 0.3% in the third quarter, compared to the second quarter of the year, half the growth rate seen in the first two quarters of the year. In quarterly terms, the economy did not grow so little since the second quarter of 2016, in the first six months of governance of António Costa. Compared to the same period last year, the economy is growing by 1.9%, in line with the Government’s forecast for the whole year.
According to INE, the acceleration in domestic demand allowed the economy to continue to show growth rates compared to the previous quarter.
This was largely due to the significant increase in household consumption expenditure on durable goods, which quadrupled the pace of growth compared with the second quarter, together with a virtual doubling of the pace of growth of expenditure on non-durable goods and services.
Investment slowed down and ended the third quarter with a 1% growth compared to the previous quarter, a value justified by the change in inventories (stock accumulation). Removing this component, the chain change in investment (gross fixed capital formation) had already been negative in the second quarter (-0.1%), and worsened significantly in the third quarter, with a fall of 1.4%.
The international environment is also weighing on the evolution of the economy, and in an increasingly pronounced manner. In the second quarter, net external demand for Portuguese goods and services had no impact on GDP, but in the third quarter, it became negative by 0.6%.
In year-on-year terms, the economy grew 1.9%, in line with the Government’s forecast for the whole year, but with the revision made by INE in the value of GDP for previous years, this growth rate is, as in the quarter-on-quarter variation, the lowest since the second quarter of 2016.