The Portuguese economy posted an external surplus of €996 million euros in the first quarter, compared to a deficit of €1.54 billion in the same period last year, the Bank of Portugal said on Monday.
In March, the current and capital account balance was €515 million, which means €1.241 billion more than in the same month of 2022.
According to the central bank, in March, the balance of goods and services became a surplus, having recorded a balance of €164 million.
Contributing to this was the €319 million reduction in the goods balance deficit to €1.823 million due to the growth of exports, of €911 million, higher than that of imports, of €592 million (up 14.2% and 6.9%, respectively), as well as the increase in the services balance surplus, from €688 million to €1.986 million (increase in exports and imports of services by 31.1% and 14.0%, respectively).
The Bank of Portugal (BoP) said that the increase in exports “mainly reflects the contribution of travel and tourism, whose exports grew, in year-on-year terms, by 36.1%.
Travel and tourism exports totalled €1.636 billion in March, which according to the Bank of Portugal, is “the highest value of the series for the month of March”.
As for the primary income account, it continued with a deficit in March but reduced by €331 million to €307 million, with the “decrease in dividends paid abroad”.
The secondary income account maintained the surplus but reduced by €197 million to €450 million, explained by the reduction in the allocation of European funds to final beneficiaries.
As for the capital account, it showed a surplus of €208 million, up €101 million compared to March 2022, “due to the greater receipt of investment aid”, says the BdP.
In the financial account, the balance was positive by €878 million in March due to the increase in foreign assets (€2.204 billion) higher than the increase in liabilities (€1.327 billion).
The increase in assets was mainly due to Bank of Portugal foreign assets in cash and deposits (€819 million) and direct investment by resident non-financial corporations (€711 million).
As regards liabilities, the increase was mainly due to the increase in non-resident deposits in Portuguese banks (€2.060 billion) and financing obtained by resident non-financial corporations (€1.106 billion), but which was partially offset by redemptions of Portuguese public debt securities held by non-resident entities (€1.933 billion).
Portugal’s net assets over the rest of the world were positive, which was due to the general government sector (€1.5 billion) and other monetary financial institutions (€1.1 billion). The central bank and the non-financial corporations recorded growth in liabilities greater than the increase in assets (-€1.6 billion and -€800 million, respectively).
Finally, Portugal’s net external debt fell from 68.1% of Gross Domestic Product (€162.9 billion) at the end of 2022 to 64.6% (€158.1 billion) in the first quarter of 2023. This is, according to the Bank of Portugal, the “lowest ratio observed since September 2007”.