Inflation stable at 0.9% in July
GDP grew by 2.9% year-on-year in the second quarter of 2017, 0.1 pp above the rate of the previous quarter. This development resulted from a greater contribution of domestic demand due to the acceleration of investment. The inflation rate stabilized at 0.9% in July 2017. Most of the economic indicators continued to reveal an upward trend in the Portuguese economy, with the exception of those of the INE – Statistics Portugal and the European Commission, which interrupted positive trajectories.
Gross Domestic Product grew 2.9% in the second quarter of 2017 year-on-year, 0.1 pp more than in the previous quarter. This figure is higher than the 2.2% and 2.3% observed in the Euro Zone and the European Union, respectively. According to INE – Statistics Portugal, these developments resulted from a larger contribution from domestic demand (from 2.6 pp to 2.7 pp), reflecting an acceleration of gross fixed capital formation, from 7.7% in the first quarter, to 9.3% in the second quarter. Net external demand made a slightly positive contribution (0.1 pp), with a slowdown in the volume of exports of goods and services similar to that of imports. Compared to the previous quarter, GDP grew by 0.3%, 0.7 pp below the growth recorded in the previews quarter and 0.4 pp lower than the growth of both the Euro Zone and the European Union.
The Consumer Price Index (CPI) registered a year-on-year change of 0.9% in July 2017, similar to that of June. The underlying inflation indicator, CPI excluding energy and unprocessed food products, registered a year-on-year change of 1.0%, 0.1 pp less than in the previous month. The Harmonized Index of Consumer Prices, which serves to compare prices between the different countries of the European Union, registered a year-on-year change of 1%, lower than in the Euro Area and in the European Union, 1.3% and 1.5%, respectively.
The consumer confidence indicator of INE – Statistics Portugal decreased in August, ending the positive trend started in early 2013, and which reached in last July the highest value of the series started in November 1997. The economic climate indicator also declined in August 2017 after reaching its peak – since July 2002 – in the previous month. The Monthly Coincident Indicators of Banco de Portugal (Portuguese Central Bank) for Economic Activity and Private Consumption increased again in August 2017. The European Commission’s economic sentiment indicator interrupted the upward trajectory and declined in August. The OECD Composite Indicators Index rose slightly again in June to 100.07.
ECO News- Portuguese Economy
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