LISBON: An about-turn in investment pushed Portugal’s economy to its highest year-on-year growth since mid-2010 at the end of last year, official data showed on Wednesday.
In its second GDP reading, the National Statistics Institute confirmed its flash 0.6 percent estimate for quarterly growth released last month, but revised the year-on-year expansion to 2 percent from 1.9 percent. That was a marked an acceleration from a revised 1.7 percent growth in the third quarter.
For all of last year, the economy grew 1.4 percent in a gentle slowdown from 1.6 percent in 2015, the INE said, also confirming its initial estimate. Both quarterly and full year-growth surprised economists when it was first released.
“Overall these are positive numbers confirming continuous growth in year-on-year terms since mid-2013 with the pace of expansion apparently stabilized at around 1.5 percent a year,” said Filipe Garcia, head of Informacao de Mercados Financeiros economic consultants in Porto.
“Private consumption is up, which could be explained by improving confidence, and more available loans also play an important role,” he said, cautioning that the improvements were all happening in a very favorable external setting of record-low European Central Bank rates and European growth.
Between 2011 and 2014, Portugal was part of a European Union/International Monetary Fund bailout programmed, which it successfully exited. Its economic problems, however, have not gone away.
Many analysts and Portugal’s international creditors warn that the current level of growth – while improved – may be insufficient for the country to reduce its massive debt burden, which at 130 percent is the third-highest in the euro zone after Greece and Italy.
In the quarter-on-quarter comparison, the INE said the contribution of domestic demand to GDP swung from a negative 0.3 percentage points in the third quarter to a positive 1.6 points, “with investment recovery standing out in particular as it rose 5 percent after a 2.9 percent fall”.
Private consumption growth accelerated to 1.1 percent from 0.4 percent, boosted mainly by demand for durable goods.
While exports grew 2.5 percent, the same as in the preceding quarter, imports jumped 4.5 percent after slipping slightly in the previous three months, the INE said.
