According to INE, the 0.2% contraction of the economy is explained by "the negative contribution of domestic demand to the quarter-on-quarter rate of change of GDP."
The Portuguese economy contracted by 0.2% in the second quarter of the year, after the surprising growth of 2.6% in the first three months of the year, according to the flash estimate released Friday by Statistics Portugal (INE), which downgraded by 0.1 percentage points the performance in the first quarter. Year-on-year, GDP advanced by 6.9%, as it grew by 11.8% in the second quarter of 2021.
“Gross Domestic Product (GDP), in real terms, registered a year-on-year rate of change of 6.9% in the second quarter of 2022 (11.8% in the previous quarter). It should be highlighted that the GDP evolution in year-on year terms partly reflects a base effect, as several measures to mitigate the pandemic were in place in the first quarter of 2021, partially restricting economic activity,” writes INE.
The 0.2% contraction of the economy, already expected by some economists, is explained, according to INE, by “the negative contribution of domestic demand to the quarter-on-quarter rate of change of GDP,” more precisely by a less pronounced growth in private consumption and investment.
In contrast, the positive contribution of net external demand increased, reflecting “the more pronounced growth of Exports of Goods and Services than that of Imports of Goods and Services.”
In the second quarter, “the implicit prices of the flows of external trade increased significantly, accelerating more in exports than in imports due to the components of services, determining a less intense loss of terms of trade compared to the previous quarter,” INE explains.
The statistics office explains the downward revision by one-tenth in the first quarter with the incorporation of more information on international trade in goods in the first three months of the year.