The Portuguese economy registered a growth of 0.4% in Q3, up from 0.1% growth in Q2, bolstered by a rise in private consumption, despite inflation being at 30-year highs.

However, exports and investment are weakening, according to the latest official data published on Wednesday. 

As part of its second GDP reading, Portugal’s National Institute of Statistics (INE) confirmed the flash estimates unveiled a month ago – including year-on-year growth of 4.9% - down from the second quarter’s reading of 7.4%. 

The statistics institute added that the quarter-on-quarter contribution of domestic demand to GDP “turned positive” to 0.4 percentage points, compared to 0.5 in the previous quarter Reuters reports, whilst net external demand stood at zero, compared to 0.6 percentage points in Q2. 

Furthermore, private consumption expanded by 1.1% in the third quarter, compared to 0.7% between April and June, due to increased spending on durable goods. 

However, exports rose just 1.2% in Q3, down from 2.9% in Q2. This is despite services exports – including recovery of Portugal’s key tourism sector to pre-Covid levels – growing 2.8% to 0.8% in Q2, the Reuters report adds. 

Moreover, investment declined 1.7%, under the 2.7% fall in Q2, whilst the contraction remains in the country’s construction sector. 

“The numbers confirm that the economy will slow down, although it is not very visible yet due to private consumption remaining strong despite high inflation,” said Filipe Garcia, an economist at the Informacao de Mercados Financeiros consultancy.

“There are already some worrying signs for the behaviour of the economy in 2023, such as the slowdown in exports and the continued fall in investment, in particular, the contraction in the construction sector,” he commented.

Elsewhere, consumer prices edged up 9.9% year-on-year in November, a marginal slowdown from 10.1% in October, the fastest rise in three decades.