The Portuguese economy will accelerate in the third quarter, growing between 1.7% and 2.2% compared to the second quarter, according to forecasts from ISEG.
Following the 15.5% growth in year-on-year terms and 4.9% quarter-on-quarter registered in the last three months, ISEG economists expect that the Portuguese economy will continue to grow in the third quarter: GDP should increase between 3.5% and 4% year-on-year and between 1.7% and 2.2% quarter-on-quarter. These figures allow for an upward revision of the growth range for the entire 2021 to between 4% and 5%.
“Maintaining the trend of the available information, and considering the annual basis, it is expected that in the third quarter of 2021 the GDP may grow between 3.5% and 4.0% in relation to the corresponding quarter and between 1.7% and 2.2% in relation to the previous quarter,” says the August economic summary released this Friday, noting that “for the year as a whole, GDP growth is revised upwards to between 4% and 5%.”
Previously, ISEG’s forecast for the year was between 3.5% and 4.5%. With this new interval, the economists are getting closer to the values that are now accepted by the Minister of Finance, João Leão, who in an interview with RTP3 once again showed that he is “convinced that the estimates will be exceeded,” referring to the official target of 4% GDP growth in 2021. Previously, Leão had pointed to 5%.
The dynamism of the economy in the third quarter will contribute to that level of growth. ISEG’s economic analysis group predicts that “after a quarter of high year-on-year growth, a quarter of more moderate growth will follow.”
Economists describe the third quarter as a period of “progressive normalisation of activity” that will include “strong growth in services, some deceleration in construction and an uncertain evolution, but more likely negative, in industry, because of the crisis in the semiconductor’s supply.”
Despite the restrictions in the automobile market, the economic analysis group at ISEG expects that private consumption will have continued to grow compared to the second quarter, mainly in the services component (tourism, for example). Investment may slow down because of construction, “but there may have been growing in other areas,” they admit.
“Within the scope of Net External Demand, a positive contribution to GDP growth is expected after several quarters, driven by the partial recovery of tourism external demand,” anticipate the economists.