The Portuguese economy reacted to the sharp drop that was recorded in the first quarter of the year and for the next three months, regained what he had lost. However, it is clear that the rapid recovery that had occurred in late 2013 lost strength, confirming the fears of those who fear a long period of moderate growth in Portugal.
INE data were in line with what was expected by most analysts. After the fall of 0.6% in GDP recorded in the first three months of the year, the Portuguese economy has avoided entering into technical recession (which would occur in the event of a second consecutive quarter of decline) and offset losses with an increase of 0, 6%. It was an expected result, mainly because the poor performance of the first quarter had been partly due to cyclical factors, including stopping a production unit of Galp’s refinery in Sines, which affected the Portuguese exports.
The problem is that this return to growth can not erase the image that the economy is slowing, heading for a record of slow recovery in economic activity. Looking at the first half of the year (in order to nullify the impact of extraordinary factors of the first quarter, what we see is an almost stagnant economy, a performance that is far from what the economy could in late 2013.
Variations of GDP over the same period last year shows that. During the fourth quarter of 2013 this indicator reached 1.5%, a result that raised hopes of a quick recovery in Portugal. Nevertheless, after a decrease to 1.3% in the first quarter of 2014, the INE has now announced that second-quarter annual GDP growth fell to 0.8%.
This puts the pace of recovery in Portuguese values much more slow, giving arguments to those who consider that the economy has not yet, in a high indebtedness and difficulties in accessing financing conditions to grow at a rapid pace, sustainably scenario.
At the end of 2013 and early 2014, the positive GDP growth had come to rely on the major contribution of domestic demand, watching to a decrease of the aid given by the net external demand (exports minus imports). This fact did raise doubts about the sustainability of the pace of recovery Portuguese. The information provided by the INE now seems to confirm these fears.
There are also presented values for the various components of GDP, because this is just a quick estimate, but the INE gives some clues. First says that “domestic demand showed a less intense positive contribution to the annual change in GDP in the second quarter, mainly reflecting the evolution of the investment.” That is, the recovery based on the recovery of domestic demand is faltering, losing strength precisely in the indicator could give more hope for the future:. Investment
After the INE also says that “the foreign demand net registered a less significant negative contribution in the second quarter due to the slowdown of imports of goods and services, with exports of goods and services slowed. ” It is natural that before a slowdown in domestic demand, imports also slow down. More worrying is that exports follow the same trend.
The negative result of this export will not be oblivious of the fact that much of the major trading partners of Portugal have recorded surprisingly negative results. Germany and France, the second and third largest customers of Portuguese exports, disappointed with contraction and stagnation of their economies.
In analyzing the results presented this Thursday by INE, the Center for Economic Studies of Portuguese Economy (NECEP) of the Catholic University said “now seems clear that the recovery of the Portuguese economy is underway, albeit at a pace that is still very tenuous.” He also stressed that the data continue to show “something erratic behavior,” subject to “many specific effects.”
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