Portugal’s economy grew by 6.7% in 2022, the “highest since 1987”, according to an operational estimate released on Tuesday by the National Institute of Statistics (INE).
Gross domestic product (GDP) growth of 6.7% in 2022 is one-tenth below the government’s forecast, as Finance Minister Fernando Medina said in late December that he was convinced that Portugal would complete “2022”. with growth [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.
According to the INE, “GDP as a whole grew 6.7% in volume in 2022, the highest since 1987, following a 5.5% increase in 2021 that followed a historic decline of 8.3%. in 2020 due to the adverse impact of the pandemic on economic activity.”
Most economists from major national and international institutions expected Portugal’s GDP to grow by 6.5-6.8% in 2022, which is an increase from what was predicted after the start of the war in Ukraine.
The Bank of Portugal (BdP) was the most optimistic after consistently revising Portugal’s GDP growth forecast upwards over the past year: in March it lowered its forecasts to 4.9%, in June it improved to 6.3%, in October to 6%. .7% and in December to 6.8%.
The forecasts of other institutions were similar: the Public Finance Council (CFP) expected the Portuguese economy to grow by 6.7%, the Organization for Cooperation and Development (OECD) by 6.7% and the European Commission by 6.6%. The International Monetary Fund, on the other hand, forecasts GDP growth at 6.2%.
The evolution recorded last year can be explained, according to INE, by the “pronounced positive contribution” of domestic demand, although “lower than that observed in the previous year”, “acceleration of private consumption and slowdown in investment”.
The contribution of net external demand “was positive in 2022 after being negative in 2021” with “exports of goods and services accelerating and imports slowing”.
In the fourth quarter of 2022, GDP grew by 3.1% year on year (down from 4.9% in the third quarter) and 0.2% year on year (0.4% in the previous quarter).
On an annualized basis, the contribution of domestic demand to the annual change in GDP “decreased in the fourth quarter, with private consumption slowing and investment falling.” The positive contribution of net external demand also declined, with exports of goods and services in physical terms “slowing down more rapidly than imports.”
INE also notes that in the fourth quarter of 2022 there was a “year-on-year loss in trade volume, but less intense than the losses seen since the second quarter of 2021, as a result of a more pronounced slowdown in the import deflator compared to exports.”
Compared to the third quarter of 2022, GDP increased by 0.2% in volume terms, “decreasing the positive contribution” of domestic demand to the chain change in GDP, while the contribution of net external demand remained “slightly negative”.
According to INE, the operational estimate published on Tuesday “includes new primary information, namely for international merchandise trade for the third quarter of 2022, which, however, did not assume a revision of the annual rate of change and in the GDP chain, published in Quarterly National Accounts by Institutional Sector of December 23, 2022”.