Portugal’s economy slows down sharply in Q2 on exports and consumption

Lisbon: Portugal’s economy grew a timid 0.1% in the second quarter compared to the previous three-month period, when it expanded a revised 0.8%, hit by staggered exports and a slowdown in private consumption, official data showed on Tuesday.

The National Statistics Institute (INE) also said in its flash estimate that gross domestic product expanded 1.5% in the quarter from a year earlier, the same rate as in the first three months of 2024.

INE said there was an increase in investment, but a slowdown in private consumption, while “the contribution of net external demand became negative”, with exports of goods and services – which includes the key tourism industry – stable in the second quarter, though imports increased.

Portugal’s quarterly growth was even weaker than the modest growth of 0.3% in France and 0.2% in Germany in the second quarter compared to the previous quarter and much slower than the robust 0.8% of its largest trading partner, Spain.

Filipe Garcia, head of Financial Markets Information Consultants, said the growth is lower than expected because of a slowdown from foreign demand.

“The number is particularly disappointing compared to Spain,” he said.

In its quarterly update of economic forecasts, the Bank of Portugal said that the economy should grow between 2% and 2.3% each year until 2026, exceeding the projected expansion in the euro zone as a whole.

Finance Minister Joaquim Miranda Sarmento said three weeks ago that Portugal could grow above 2% in 2024 and 2025.

“It is still possible to reach 2% growth this year, but for that to happen it is necessary for the current quarter to be particularly strong,” Garcia said.

The Portuguese economy grew 2.3% last year.