Portuguese GDP surprised on the upside rising 1.1%qoq in Q2. The yoy rate rose from a downwardly revised -4.0% to -2.0%. According to INE, a pick-up in export growth and a smoother decline in investment are the main drivers for this jump. Should the economy stabilise now until the end of the year, the annual growth rate in 2013 would be -1.6%.
Though today’s news are undoubtedly positive, they still need to be taken with a pinch of salt. Portuguese GDP has been very volatile over the last twelve months due to changes in seasonality related to fiscal policy measures, such as the changes in the holiday extra pays and changes in the VAT, but also due the date of Easter that in 2012 happened in the first quarter and in 2013 was in the second quarter, thus affecting the yoy rates.
Overall though, some improvement in GDP is supported by other activity and confidence data up to July. As a result, Macrometria has revised up its GDP growth forecasts to -1.9% in 2013. We anticipate growth of 0.3% in 2014.
In the Euro area, GDP was up 0.3%qoq (-0.7%yoy) in Q2 after -0.3%qoq (-1.1%yoy) in Q1. The main driver of Euro area growth was German GDP which jumped 0.7%qoq after stagnating in the first quarter. German is also a major destination of Portuguese exports. French GDP was up 0.5%qoq while Italian and Spanish GDP fell 0.2%qoq and 0.1%qoq respectively.