Portuguese economy grew 2.2% in 2019

The Portuguese economy grew 2.2% in 2019, revealed this Friday the National Statistics Institute (INE), 0.2 percentage points above the flash estimate presented two weeks ago. The data confirm a slowdown in Portuguese GDP compared to 2018. Even so, the growth rate was better than what was expected by the Government.

The Government, the International Monetary Fund (IMF), the Public Finance Council (CFP) and the Organisation for Economic Cooperation and Development (OECD) anticipated economic growth of 1.9%. The European Commission and the Bank of Portugal had a growth forecast one tenth higher (2%).

INE explains that this upward revision was mainly due to the incorporation of the new information from the Balance of Payments by the Bank of Portugal. “Compared to previous estimates, the new results determined an upward revision of 0.2 p.p. of GDP growth rates in 2018, to 2.6% in volume and 4.3% in value. This new information also implied an upward revision of 0.2 p.p. of the change in volume of GDP in 2019, released in the Flash Estimate for the 4th quarter.”

The deceleration in the national economy was mainly due to the slowdown in household consumption. The contribution of domestic demand decreased to 2.7 percentage points (3.1 points in 2018),” reflecting the less intense growth of private consumption.”

It should be noted that the net external demand presented in 2019 a more negative contribution (-0.6 p.p) compared to 2018 (-0.4 p.p), with a deceleration of exports of goods and services (from 4.5% in 2018 to 3.7% in 2019) and of imports of goods and services (from 5.7% in the previous year to 5.2% in 2019).

On the other hand, the investment increased by 6.5%, (6.2% in 2018), reflecting the acceleration of Gross Fixed Capital Formation (GFCF) to a 6.4% rate of growth (5.8% in the previous year). Investment grew especially because of the GFCF in construction that registered a marked acceleration, shifting from a rate of change of 4.6% in the previous year to 9.4%.