# Portugal’s Q3 growth accelerates with consumption but future not shining
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-11-30
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Portugal's Economy Grows 0.4% in Q3 Despite Rising
Meta Description: Portugal's economy expanded 0.4% in Q3, with rising private consumption but faltering exports and investment. Official data highlights growth concerns.
URL: https://financedigest.com/portugals-q3-growth-accelerates-with-consumption-but-future-not-shininghtml

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By Sergio Goncalves

LISBON (Reuters) – Portugal’s economy expanded 0.4% in the third quarter from 0.1% in the previous quarter, boosted by higher private consumption despite inflation at three-decade highs, but exports and investment are now faltering, official data showed on Wednesday.

In its second reading of gross domestic product, the National Institute of Statistics (INE) confirmed its flash estimates released a month ago, including a year-on-year expansion of 4.9%, down from 7.4% in the second quarter.

INE said the quarter-on-quarter contribution of domestic demand to GDP [“turned positive”](https://www.financedigest.com/uk-retailers-turn-positive-on-sales-hopes-after-bleak-winter.html "UK retailers turn positive on sales hopes after bleak winter") to 0.4 percentage points versus minus 0.5 pp in the previous quarter, while net external demand was nil compared to 0.6 pp in the second quarter.

Private consumption grew 1.1% between July and [September – compared to the 0.7% of the previous three months](https://www.financedigest.com/spain-september-final-12-month-inflation-revised-down-to-8-9.html "Spain September final 12-month inflation revised down to 8.9%") – thanks to spending on durable goods.

But exports grew just 1.2% in the third quarter, down from the previous quarter’s 2.9%, despite services exports – which include the key tourism [sector’s recovery to pre-pandemic levels – rising](https://www.financedigest.com/guess-what-public-sector-adoption-of-e-invoicing-on-the-rise.html "GUESS WHAT? PUBLIC SECTOR ADOPTION OF E-INVOICING ON THE RISE!") 2.8% compared to 0.8% in the second quarter.

Investment fell 1.7%, less than the 2.7% drop in the April-June period, while the construction [sector continued to contract](https://www.financedigest.com/dollar-slides-on-contraction-in-private-sector-activity.html "Dollar slides on contraction in private sector activity").

The numbers confirm that the [economy will slow](https://www.financedigest.com/visa-revenue-growth-slows-more-as-tough-economy-sobers-spending.html "Visa revenue growth slows more as tough economy sobers spending") 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](https://www.financedigest.com/logitech-quarterly-sales-fall-22-as-slowdown-fears-bite.html "Logitech quarterly sales fall 22% as slowdown fears bite") in investment, in particular, the contraction in the construction sector,” he added.

Portuguese [consumer prices](https://www.financedigest.com/analysis-to-raise-prices-or-not-consumer-goods-makers-weigh-bets-on-buyer-strength.html "Analysis-To raise prices or not? Consumer goods makers weigh bets on buyer strength") rose 9.9% year-on-year in November, slowing slightly from 10.1% in October, which was the fastest increase in 30 years.

Finance minister Fernando Medina told Reuters two weeks ago that the government expected [economic growth](https://www.financedigest.com/addressing-the-credit-gap-to-unlock-economic-growth-in-africa.html "Addressing the credit gap to unlock economic growth in Africa") to reach at least 6.7% this year, beating its previous 6.5% forecast.

However, Medina saw [growth decelerating sharply](https://www.financedigest.com/uk-growth-slows-sharply-in-july-as-covid-pingdemic-hits.html "UK growth slows sharply in July as COVID ‘pingdemic’ hits") to 1.3% in 2023.

(Additional reporting by Joao Manuel Mauricio in Gdansk, editing by Mark Heinrich)


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