It’s official: Portugal’s Q2 GDP slumped 16.3%

The Portuguese economy contracted 16.3% year-on-year in Q2 2020. In comparison with the previous quarter, the fall was 13.9%. The data was released this Monday by the National Statistics Institute (INE) in the quarterly national account, showing that domestic demand, in particular private consumption, made the biggest contribution to the economy’s fall.

“n the second quarter of 2020, Gross Domestic Product (GDP) registered a year-on-year growth rate of -16.3% in volume, after a decrease of 2.3% in the previous quarter,” the statistics office announced, explaining that “the strong contraction of the economic activity reflected the COVID-19 pandemic impact which had, in the first two months of the quarter, a significant impact.”

“Regarding Flash estimates and QNA for the previous quarter, current QNA incorporate new information, causing revisions in some aggregates for the most recent quarters,” the INE clarifies, after improving the estimate by two-tenths a fortnight ago.

The 16.3% contraction in the second quarter of this year, due to the pandemic crisis, is the biggest GDP fall in a quarter. So far, the biggest GDP drop in a quarter on a year-on-year basis had been in the fourth quarter of 2012 when the economy contracted by 4.5 percent, according to the INE’s historical series, starting in 1996.

The largest negative contribution to GDP was made by domestic demand (-11.9 percentage points), reflecting the sharp fall in private consumption – the largest component of GDP – and, to a lesser extent, in investment. “Domestic demand presented a negative contribution to the year-on-year rate of change of GDP, considerably more marked than that observed in the previous quarter (shifting from -1.2 to -11.9 percentage points),” describes INE, adding that private consumption contracted by 14.5% and investment by 10.8% year-on-year.