Portuguese Q4 GDP growth was revised up by one tenth in today’s second release, to 0.6% quarter on quarter (qoq) and +1.7% year-on-year (yoy). For the year as a whole, GDP growth was confirmed at -1.4%, much better than what was expected at the beginning of the year.
Today’s data suggests that the economy continued to re-balance in Q4, as the major contributors to quarter-on-quarter (qoq) growth were Export growth, with a contribution of 0.4 p.p. qoq, and Gross Fixed Capital Formation, with a contribution of 0.5 p.p. qoq. Private Consumption actually fell between Q3 and Q4 but a freak decline in Q4 means that the yoy rate was well into positive territory.
Today’s numbers confirm that the recovery is well underway in Portugal, and more importantly, suggest that investment has finally hit the bottom, after several quarters of sharp declines. The reasons for this improvement are manifold, but the decline in banks’ rates and the recovery in new loans may have had an important impact. A recovery in investment is crucial to make the current recovery more self-sustained.
Macrometria has now revised its forecasts for the Portuguese economy. We now expect GDP growth to rise 1.4% in 2014 and 1.5% in 2015 after -1.4% in 2013. The new detailed forecasts will be published later today.