Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Portugal economy slowing after strongest year in decades

Published 31/01/2023, 09:46
Updated 31/01/2023, 10:52
© Reuters. FILE PHOTO: People wearing protective masks walk in arroios neighborhood amid the coronavirus disease (COVID-19) in Lisbon, Portugal, December 23, 2021. REUTERS/Pedro Nunes

© Reuters. FILE PHOTO: People wearing protective masks walk in arroios neighborhood amid the coronavirus disease (COVID-19) in Lisbon, Portugal, December 23, 2021. REUTERS/Pedro Nunes

By Sergio Goncalves and Andrei Khalip

LISBON (Reuters) -Portugal's economy grew 6.7% in 2022, its strongest rate in 35 years, boosted by domestic demand and booming tourism, but inflation hampered demand in the last quarter in a foretaste of an expected steep slowdown this year.

Gross domestic product (GDP) grew by 0.2% in the final quarter versus the previous three-month period when it expanded by 0.4%, the National Statistics Institute said on Tuesday, noting a "slightly negative" contribution of net exports.

The 2022 growth rate was largely in line with the government's target of 6.5%.

Inflation is close to three-decade highs.

"We can already see that family income is being affected by inflation and the rise in interest rates on mortgage loans and exports of goods are already slowing down," said Paulo Rosa, senior economist at Banco Carregosa, who expects tourism to be "the only component truly supporting Portugal's growth" this year.

He said: "2023 will be a year of strong deceleration and a recession cannot be ruled out if the United States and Germany go into recession."

The government projects expansion to slow to just 1.3% in 2023, with private consumption - which represents two-thirds of GDP - almost stagnating as families struggle with high energy and food prices alongside rising interest rates and slowing exports.

© Reuters. FILE PHOTO: People wearing protective masks walk in arroios neighborhood amid the coronavirus disease (COVID-19) in Lisbon, Portugal, December 23, 2021. REUTERS/Pedro Nunes

Portugal's GDP grew by 5.5% in 2021 helped by the lifting of COVID-19 restrictions, revitalised private consumption, tourism and exports.

That had a somewhat delayed positive impact in Portugal, allowing it to outgrow most EU countries last year.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.