Exports lift Portugal’s GDP as investment slows

Portugal’s economy grew 0.8% quarter on quarter and 2.5% year on year in the second quarter, with exports providing the decisive support, according to data confirmed by the National Statistics Institute and economists interviewed by ECO. The figures suggest external demand is helping sustain growth, even as investment shows signs of losing momentum.

Between April and June, net external demand was the key driver of quarterly GDP growth as exports accelerated, while investment slowed to 5.7% after a 10.4% surge at the start of the year linked to Nvidia chips for a data centre in Sines. Economist António Nogueira Leite told ECO that the external sector “performed well” and was decisive for the result, but said the investment data showed a “clear” slowdown.

João Duque also warned that the investment trend was weakening, especially at the end of Portugal’s Recovery and Resilience Plan execution period. He said the latest reading was “not a very interesting” pace of growth given that the economy was still benefiting from PRR funds. Nogueira Leite said Portugal still appears capable of reaching the government’s 2% GDP growth target for 2026, unless there is a sharp reversal, but added that the investment performance was worse than he had expected.

The economists nevertheless described the overall GDP data as solid. Nogueira Leite said the economy had shown resilience despite uncertainty earlier in the year, while Duque noted that Portugal had not recorded two consecutive quarters of growth at this level since 2023. INE also said household final consumption expenditure rose 3.7% year on year in volume terms in the second quarter, with spending on durable goods accelerating to 9.3%.

Originally published at Eco.pt