Portugal’s economy grew by 2.2% year-on-year and 0.8% quarterly in the final quarter of 2023, avoiding a technical recession and guaranteeing GDP growth of 2.3% for the full year, the INE fair said on Tuesday.
Portugal’s economic growth in the fourth quarter of 2023 was unexpected, as economists consulted by Lusa expected gross domestic product (GDP) to increase by 1.2% to 2% at an annual rate and range between a 0.6% increase and a 0.6% contraction. 0.1%.
According to the first estimate of the National Institute of Statistics (INE), the Portuguese economy grew by 2.2% year on year in the final period of 2023 and by 0.8% compared to the third quarter, avoiding a technical recession after a fall in GDP. in the penultimate quarter of the year decreased by 0.2% quarter on quarter.
For the year as a whole, GDP grew 2.3%, in line with the government’s expected 2.2% target, following growth of 6.8% in 2022, the highest level since 1987.
INE’s preliminary data does not yet detail the evolution of the various components of GDP, but the statistics body already indicates that “domestic demand made a positive contribution to the annual change in GDP, although less than that observed in the previous year, with a slowdown in private consumption and investment.”
The contribution of net external demand was also positive in 2023, “but less intense than in 2022, with exports and imports of goods and services slowing significantly.”
In turn, the 0.8% qoq growth in the fourth quarter was the result of an increase in the contribution of domestic demand driven by “private consumption behavior”, while the contribution of net external demand “was less negative”.
The INE also shows that an annualized deviation of 2.2% in the fourth quarter of 2023 (following a 1.9% increase in the third quarter) contributed to domestic demand, which remained strong, with private consumption accelerating and growth slowing. investments.
At the same time, “the contribution of net external demand to the annual change in GDP became positive, while exports of goods and services in physical terms showed more intensive growth than imports.”
In its proposal for the 2024 government budget (OE2024), the Ministry of Finance indicated that Portugal’s economy will grow by 2.2% in 2023, as did the Public Finance Council, the European Commission and the Organization for Economic Co-operation and Economic Development (OECD). .
The International Monetary Fund (IMF) forecast the rate at 2.3%, and the Bank of Portugal (BdP) at 2.1%.