INE confirms GDP growth of 6.7% in 2022, the highest since 1987.

The National Institute of Statistics (INE) said on Tuesday that the Portuguese economy grew by 6.7% in 2022, the highest since 1987, and by 3.2% year-on-year in the fourth quarter of last year.

In the quarterly national accounts released on Tuesday, the statistical institute kept the 2022 gross domestic product (GDP) growth change at 6.7% released Jan. 31, one tenth below the government’s forecast. At the end of December, Finance Minister Fernando Medina said he was convinced that Portugal would end “2022 with a strong [da economia] about 6.8%”.

However, this figure is higher than the 6.5% provided for in the State Budget for 2023 (OE2023), which was presented to Parliament in October last year.

As for the fourth quarter of 2022, INE revised upward year-on-year GDP growth to 3.2% (compared to an estimate of 3.1% in January and a slowdown from 4.8% in the third quarter) and variation chain. to 0.3% (same rate as in the previous quarter, but higher than the 0.2% put forward in the January estimate).

“In 2022 as a whole, GDP grew by 6.7% in volume, the highest since 1987, following a 5.5% increase in 2021 that followed a historic decline of 8.3% in 2020 from due to the adverse impact of the pandemic on economic activity,” the institute says.

In nominal terms, GDP increased by 11.5% in 2022 (7.1% in 2021), reaching around 239 billion euros.

According to the institute, “domestic demand made a significant positive contribution to GDP growth, albeit less than the previous year, with private consumption accelerating and investment slowing.”

Thus, domestic demand in real terms slowed down to a rate of change of 4.5% (5.6% in the previous year), having changed from a contribution to the annual change in GDP of 5.8 p.p. in 2021 to 4.7 p.p.

As for the contribution of net external demand, it turned positive in 2022, while the acceleration of exports of goods and services was more intense than imports of goods and services.

Personal consumption — final consumption spending by resident families and non-profit organizations serving families — rose 5.7% in real terms, accelerating from 4.7% recorded in 2021.

“Spending on non-durable goods and services increased from 4.9% in 2021 to 5.2%, and the durable goods component also accelerated from 3.6% to 11.6% in 2022, with a focus on the recovery of the automotive component after negative indicators in the previous three years,” he notes.

As for public consumption (final consumption spending of the general government sector), it slowed down in real terms, recording a rate of change of 2.4% (4.6% in the previous year). In nominal terms, it registered a growth of 7.3% (6.1% in 2021).

Investment grew by 2.7% in real terms in 2022, slowing down “significantly” from 10.1% recorded the previous year.

INE also clarifies that gross fixed capital formation (GFCF) registered “less pronounced growth” compared to the previous year (from 8.7% to 2.7%), while stock change showed a zero contribution to GDP change (0 .2 percentage points). in 2021).

Net external demand contributed 2.1 percentage points after contributing -0.3 percentage points in 2021, with exports of goods and services increasing from 13.4% to 16.7% and imports slowing from 13.2%. % in 2021 to 11.0%.

INE explains that exports of goods in physical terms increased by 8.7% in 2022 (11.2% in 2021), while exports of services registered a “significant acceleration”, increasing from 19.6% in 2021 to 37.7%.

“In the case of services, this result partly reflects a significant increase in the tourism component (80.9% change) after -56.9% and +27.0% in 2020 and 2021, respectively,” he explains.

As for the import of goods, it increased by 9.8% (12.9% in 2021), while services grew by 17.2% (15.1% in 2021).

In a review published on Tuesday, INE also notes that “in an international context of high inflation, the implicit GDP deflator accelerated in 2022 to a change of 4.5% (1.5% in the previous year).”

“The domestic demand deflator also accelerated significantly, from 2.1% in 2021 to 6.3% in 2022, reflecting a move in the same direction in final consumption spending and investment,” he adds.

In nominal terms, the external balance of goods and services was less negative in 2022, rising from -2.9% of GDP in 2021 to -2.5% of GDP.

The import deflator for goods and services recorded a change of 18.6% (7.4% in the previous year), while the export deflator increased by 14.8% (6.1% in 2021), which was “partially reflected in a more intense impact growth in energy prices per import deflator”.

In 2022, gross value added (GVA) at basic prices registered a volume change of 6.1% after increasing by 4.9% in 2021.

Employment in all occupations (measured by the number of people) rose by 2.0% after increasing by 1.9% in the previous year, with paid employment increasing by 3.3% after growing by 1.8% in 2021.

Taking into account employment measured by the number of hours worked, there was an increase of 2.9% in 2022 (3.1% in 2021), while productivity measured by the ratio between GDP and the number of employees was 4.0% ( 2.9% in 2021). ), and the ratio between GDP and hours worked increased from 1.7% in 2021 to 3.1% in 2022.

Taking into account the fourth quarter of 2022, INE revised upward year-on-year GDP growth to 3.2% and chain change to 0.3%.

As he explains, the contribution of domestic demand to changes in GDP on an annualized basis decreased in the 4th quarter from 3.2 p.p. in the 3rd quarter to 1.9 p.p. with a less accentuated growth in private consumption and a decrease in investment. .

In turn, the positive contribution of net external demand to GDP change on an annualized basis also decreased to 1.3 percentage points (1.6 percentage points in the previous quarter), reflecting a slowdown in exports of goods and services in physical terms. more intensively than imports of goods and services.

“This is the seventh consecutive quarter of a year-on-year decline in trade turnover, albeit the weakest since the second quarter of 2021, as a result of a sharper slowdown in the import deflator relative to exports. deflator,” notes INE.

In the chain comparison from October to December, the contribution of domestic demand to the chain change in GDP (0.2 p.p.) was lower than in the previous quarter (0.7 p.p.), while the contribution of external demand became positive (0.1 p.p.). percentage points), after a negative reading in the third quarter (-0.4 percentage points).

The results published by INE also include a revision of preliminary 2021 data, with the new results indicating an upward revision of 0.1 percentage point in the rate of change of GDP in nominal terms in 2021 to 7.1%, while in real In terms of growth rates remained at the level of 5.5%.

On a quarterly basis, the inclusion of new information also led to revisions to year-on-year change rates, which ranged from -0.1 percentage point in the first and third quarters of 2022 to +0.1 percentage point in the fourth quarter of 2022.