Portugal’s economy moves from deficit to external surplus of ME 704 until May

The Portuguese economy registered an external surplus of 704 million euros through May, comparable to a deficit of 3,661 million euros in the same period last year, the Bank of Portugal (BdP) said this Thursday.

According to the central bank, the change from deficit to surplus is due to a 520 million euro decrease in the trade deficit, as exports grew more than imports (1,657 million euros and 1,137 million euros) in the first five months of the year. ), as well as an increase in the services surplus of €2,741 million, an evolution driven mainly by an increase of €1,755 million in travel and tourism.

The reduction in the primary income account deficit by EUR 543 million to EUR 2,208 million also contributed to the evolution, driven by an increase in investment income, which had a higher growth in receipts than payments, and a rising surplus in secondary income. accounts by €79 million to €2,136 million, reflecting an increase in social benefit receipts and a decrease in the financial contribution made by Portugal to the European Union budget, and finally an increase in the capital account surplus of €482 million to €988 million, in mainly through greater allocation of community funds.

Including May 2023 alone, the current and capital account surplus was €11 million, comparable to a deficit of €1,696 million in the same month of 2022.

In May, the balance of goods and services turned into a surplus with a balance of 124 million euros, which is the result of a reduction in the deficit of the balance of goods by 121 million euros to 2,220 million euros. This reduction reflects a EUR 176 million fall in exports, which was less than a EUR 297 million fall in imports (a fall of 2.5% and 3.2% respectively).

The surplus in the balance of services also increased from 474 million euros to 2,344 million euros.

The Bank of Portugal reports that exports and imports of services increased by 14.7% and 4.6% respectively.

“This growth was primarily driven by travel and tourism, as well as transportation services. Exports and imports of travel and tourism grew by 20.9% and 8.9% respectively, resulting in an increase in the balance of this item by 333 million euros,” he said. speaks.

In May, travel and tourism exports amounted to 2,184 million euros, which is the highest value in the series for the month of May.

As for the balance of primary income, the deficit narrowed by 891 million euros, to 852 million euros, compared to May 2022, “mainly due to a reduction in investment income paid abroad.”

The positive balance of the secondary income account increased by 52 million euros to 482 million euros, while the positive balance of the capital account amounted to 257 million euros, which is 170 million euros more than in the same period last year.

The BdP data also shows that the financial capacity of the Portuguese economy in May 2023 resulted in a financial account surplus of 282 million euros.

This balance is the result of an increase in external assets of 489 million euros, in particular, external assets of Banco de Portugal in cash and deposits (316 million euros), an increase in external liabilities of 207 million euros, due to an increase in deposits of non-residents in resident banks (749 million euros) and the obligations of the central bank to the Eurosystem (573 million euros). On the other hand, there was a reduction in Portuguese government debt securities held by non-residents (a decrease of 1,247 million euros).