In a period marked by the loosening of the Covid-19 restrictions, the Portuguese economy grew at an annualized rate of 15.5% in the second quarter of 2021. Compared to the previous quarter, the growth rate was 4.9%. The data was released Friday by Statistics Portugal (INE).
“Gross Domestic Product (GDP) in real terms registered a year-on-year rate of change of 15.5% in the second quarter of 2021 (-5.3% in the previous quarter). This evolution is influenced by a base effect, as the restrictions imposed on economic activity as a result of the pandemic were felt more intensely in the first two months of the second quarter of 2020, leading to unprecedented contraction of economic activity,” INE explained.
This is the strongest annualized growth rate in a quarter since at least 1996, when the current INE historical series began. Both the flash estimate for year-on-year and quarter-on-quarter growth are in line with most economists’ forecasts.
In the year-on-year comparison, domestic demand made a more positive contribution to the economy’s growth, benefiting from the increase in private consumption, while net external demand made a less negative contribution, also favouring gross domestic product.
This was possible because there was a more significant increase in exports of goods, which have been growing in this period compared to 2019. However, there was a loss in terms of trade (competitive advantage) for Portuguese goods, “with the behaviour of the import deflator having been influenced, to a large extent, by the pronounced growth in the prices of energy products,” INE notes.
Compared to the first quarter of this year, the country’s GDP increased by 4.9% in volume, more than offsetting the negative rate of change (-3.2%) observed in the previous quarter.
According to Statistics Portugal, this result is explained by “the highly positive contribution of domestic demand to the quarter on quarter rate of change of GDP, after the negative contribution in the first quarter.” INE also adds that “to a less extent, it is also explained by the less negative contribution of net external demand in the second quarter of 2021.”