Economy grew only 0.1% in the first quarter, 0.8% YoY – Observer

The Portuguese economy began to slow down and grew only 0.1% in the first quarter of this year compared to the last quarter of the previous year, an increase of 0.8% over the first quarter of last year, the result of a drop in Portuguese exports, today advanced the INE. Largest euro economies are growing more

It was known that the economy had slowed in the second half of last year, with residual quarterly growth – 0.1% in the third quarter and 0.2% in the fourth quarter in jail. Now, according to the first estimate of INE for the first quarter of the year, the economy began to grow more slowly, only 0.1% over the last quarter of the year.

Growth YoY (compared to the same quarter last year) also shows a growth below what is estimated for the year. GDP will have grown only 0.8%, a pace far from the 1.8% that the Government expects to happen throughout the year, and even the most pessimistic forecasts of the IMF and the European Commission, 1.4% and 1.5 %, respectively.

GDP data in the first quarter. Source: Flash Estimate. INE.

The result confirms the expectations of the most pessimistic. The average group of economists contacted by Lusa published Thursday pointed to the economy grew 0.3% over the last quarter of last year and 1.1% over the same quarter last year. In the end, even the most pessimistic hit this group, the Situation Center of the Portuguese Economy (NECEP) of the Catholic University, expected a 0.1% economic growth in chain and 0.8% YoY, the same result given released today by the INE.

what justifies this slowdown

According to INE, an even short explanation, since it is a first estimate, the slowdown over the third quarter due to the negative contribution of net external demand. The difficulties in the main markets for Portuguese exports led to a reduction of Portuguese exports and this will have caused the slowdown of the economy, as domestic demand has contributed to an increase in GDP in the context of recovery of the Portuguese income.

the effect of the reduction in net external demand was even more penalizing than that observed at the end of the year – again, reflecting the slowdown in exports – but there is also a significant slowdown in investment

<. p> “net external demand showed a more negative contribution to the annual GDP growth in the previous quarter, reflecting the slowdown in goods and services exports. Domestic demand remained a positive contribution, close to the previous quarter, noting a more intense growth of private consumption, while investment slowed significantly, reflecting the decrease in gross fixed capital formation, “the INE.

the Portuguese economy grew 1.5% last year and the government expects that this growth is more robust this year, 1.8% of GDP. It was the second consecutive year of growth after the GDP has increased 0.9% in 2014.

The INE will publish new estimate for the evolution of the economy in the first quarter next May 31.

the biggest eurozone economies are speed

it was not only in Portugal that were known figures on the evolution of the economy . In Germany, the economy accelerated 0.7% in the first quarter compared with the end of last year, a hefty increase from the 0.3% that had grown at the end of last year (1.3% YoY). According to the Institute of German Statistics, this growth is due to higher growth in domestic demand in a fragile context in foreign trade also affects the largest economy in the euro area.

In the Netherlands also found a growth acceleration in the first quarter, from 0.3% to 0.5%, but in the Italian case, although there is an acceleration of growth, from 0.2% to 0.3%, although still at a pace . low

Still, these results – that join the better numbers than expected for the French economy known at the end of April – to show a trend of acceleration of the euro area economy, with four of the five largest economies of the eurozone to grow more than at the end of the year.

Growth accelerates in the euro area

the economy also grew faster in euro zone and the European Union, accelerating to 0.5% in the first quarter (both in the eurozone and in the EU) this year compared to the end of 2015, after growing 0.3% and 0.4%, respectively. In annual terms, the eurozone economy grew by 1.5% and 1.7% of the European Union.

Portugal is well below the average of both the eurozone and the European Union, regardless of the period reference with which to compare, but compared to the last quarter of last year, four contracting countries (Greece, Latvia, Hungary and Poland) and a country whose economy stagnated (Estonia). Compared to the first quarter of 2015, there are only two countries in the European Union that grow less than Portugal: Hungary (which is not part of the euro zone) only grew by 0.5%; and Greece, whose economy fell 1.3%. There are eight countries that have not submitted data for the first quarter

Eurostat confirms, however, some good news for Portugal, that the largest euro area economies are accelerating their growth. These are of course Germany, as mentioned above, and Spain, which maintained robust growth in the first quarter, both major trading partners of the Portuguese economy in the euro area.

confident government in turn

In response to these figures, the economy minister says the government already has data that give confidence to the government that the economy may be to get around. According to Manuel Caldeira Cabral, the strong demand that says exist for EU funds for investment and data on job creation give hope to the Government that the economy may be reacting to the slowdown coming since August.

” we have some data that are more positive job creation, reducing unemployment over the last year, data from a strong demand for EU funds for investment that demonstrate that there are some aspects of the Portuguese economy that already are responding, and there are prospects for there may be a change of this economic slowdown coming since August last year and we have to change, “said the official, on the sidelines of a conference in which it participated in Lisbon.

the Finance Minister has also said the numbers. Vila Real de Santo António, Mário Centeno was confident that the economy will continue to accelerate throughout the year, even assuming so the figures for the first quarter disappointed, “is indeed a year of beginning that did not make the difference towards the end of last year that everyone expected, “he said.

the official says the slowdown is due to the negative developments in some very important markets for Portuguese exports, but argues that internally the economy is evolve positively and that will not change the government’s policy and that does not put in question or the growth targets nor deficit.

Mario Centeno argued saying that tax revenue in April have grown at a faster rate than expected by the Government, data of budget execution that were not yet known, and that the employment data in some industry sectors – such as services and industry – are showing growth that supports the thesis that the economy is evolving favorably the internal component. The external component, the government expects that the main markets for Portuguese exports improve and that, with time, companies find new markets.

(updated Article at 11:11 to statements by Finance Minister and the Minister of Economy)