Portugal at the bottom of OECD’s projected return to GDP before Covid

Although the economy has accelerated in recent months, Portugal continues to rank at the bottom in terms of economic recovery, both in the European Union and among the countries of the Organisation for Economic Cooperation and Development (OECD). According to an indicator created by the Organisation specifically for the pandemic situation, the Portuguese economy remained in the second quarter about 7% below the pre-crisis trend, among the worst of the 45 countries analysed.

Unlike other analyses, this OECD tracker does not simply compare the level of economic activity in 2021 to that of 2019 to see if it has already recovered the pre-crisis level. The indicator goes further, comparing the current size of the economy with the level that would have been reached in the pandemic’s absence, taking the latest OECD projections for each country’s economic growth in 2019, before Covid-19, as a basis for comparison.

Now, based on these OECD figures, Portugal is among the economies most behind in fully recovering from the pre-crisis trend, alongside countries such as Indonesia (IDN), Spain, Greece, Slovenia, India (IND) and the Czech Republic.

Difference between current GDP and projected GDP before the pandemic

However, with the Portuguese economy having already recovered further in the third quarter. According to the most recent OECD data, in the second week of August, the Portuguese GDP was about 3.1% below the pre-crisis economic growth trend. Compared to 2020 alone, the level of economic activity increased by 3.5% and, in direct comparison with 2019, was up slightly by 0.35%.

Already above the pre-crisis trend is Ireland’s GDP, which is significantly influenced by accounting effects that impinge on its calculation, and Estonia’s. Countries such as Turkey, Australia, South Korea, New Zealand, Finland, Sweden, the United States – which has already recovered its GDP before the pandemic – and Lithuania are on the way up, according to the OECD data.

Economic activity in the second week of August at 3.1% of pre-crisis trend

These comparisons are derived from data from the OECD’s indicator that measures economic activity in real-time through Google searches. The new tool was developed by OECD economist Nicolas Woloszko, using machine learning (algorithms) and data from 250 variables from Google Trends – Google search trends on consumption, employment, real estate, economic uncertainty, among others – to track GDP change in real-time. This indicator does not tell us what will happen, but what is happening.