GDP rose by less than the EU and Euro area in the second quarter

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Page created: Tuesday, 4 October 2016 16:55 GMT

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Tourist activity with a two-digit increase in July 2016

Portuguese economy rose 0.9% year-on-year in the second quarter of 2016. The balance of payments deteriorated in the first seven months of the year but remained positive. Tourist activity maintained its high growth in July. The IMF concluded that the economic recovery in Portugal is losing momentum. Portugal fell eight places in the Global Competitiveness Report of the World Economic Forum.

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According to the Portuguese Central Bank (Banco de Portugal), and regarding the balance of payments, the aggregate balance of the current and capital accounts was 249 million euros in the first seven months of the year, below the amount of 1 161 million euros for the same period in 2015.

The balance of goods and services registered a surplus of 2 186 million euros until July, an increase from the 1 607 million euros presented in the same period in 2015, as a result of the decline in imports (2.7%) higher than that of exports (1.3%).

According to the international trade statistics from INE – Statistics Portugal for July 2016, exports and imports of goods decreased 4.6% and 7.2%, respectively, compared with the same month of last year. Excluding Fuels and Lubricants, exports and imports declined by 3.1% vis-à-vis July 2015. In the first seven months of the year, exports and imports fell 1.9% and 2.2%, respectively, compared with the same period of last year, with the trade balance deficit slightly improving by 225 million euros.

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Tourist activity kept its growing trend in July 2016, with hotel establishments recording 2.1 million guests and 6.5 million overnight stays, which means 10.2% and 7.0% year-on-year increases, respectively. Total revenue rose 16.8% and revenue from accommodation increased 17.5%.

  • The Consumer Price Index annual rate rose to 0.7% in August 2016. The annual core inflation rate (CPI excluding energy and unprocessed food products components) was 0.6% in comparison with the same month of last year. The Harmonised Index of Consumer Prices (HICP), which serves to compare the different countries in the European Union was 0.8%, in comparison with August 2015, 0.6 p.p. and 0.5 p.p. above the rates of the Euro area and the European Union, respectively.

  • prices

Regarding the economic climate indicator from INE – Statistics Portugal, it stabilized in September, after rising in July and August. The Portuguese Central Bank (Banco de Portugal) published its coincident indicator, which increased for the second consecutive month, after stabilizing in June. Following an interregnum of two months, the OECD released its composite leading indicators – with data from July. For Portugal, the index registered in July a value of 100.64, corresponding to a monthly growth compared with the previous month, continuing a growing trend since January (100.17).

The International Monetary Fund (IMF) published on 22 September its fourth post-program monitoring report, elaborated on 5 August. The IMF concluded that the economic recovery in Portugal is losing momentum, with GDP growth being held back by weaker export growth and sluggish investment.

The World Economic Forum presented its Global Competitiveness Report 2016-2017, in which Portugal dropped eight positions to 46th place. Of the twelve pillars assessed, Portugal decreased in seven, climbed in four and maintained its position in technological readiness. There was a drop of ten positions in higher education and training; nine positions in financial market development; seven positions in institutions; six positions in goods market efficiency; five positions in business sophistication; and two positions in market size. Portugal rose nine positions in health and primary education; seven positions in macroeconomic environment; two positions in labour market efficiency and one position in infrastructure. The Executive Opinion Survey concluded that tax rates, inefficient government bureaucracy, policy instability, restrictive labour and tax regulations were the most problematic factors for doing business in Portugal. Nevertheless, access to financing has been improving in Portugal since 2012.

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