The Portuguese economy is expected to grow 2.2% in the third quarter year-on-year, and 0.6% quarter-on-quarter, according to the Economic Situation barometer from CIP – Confederação Empresarial de Portugal and ISEG.
The estimated growth is explained by the increase in private consumption and the good performance of the industry, commerce and construction sectors, according to the barometer released this Tuesday, 28th.
However, the general director of CIP, Rafael Alves Rocha, warns of the fragility of this model, especially when it is based on specific increases in disposable income.
On the positive side, it points to “the reinforcement of public and private investment resulting from the implementation of the PRR (Recovery and Resilience Plan), although we consider the expected worsening of the negative contribution of net external demand to be worrying”.
The ISEG Confidence Index also highlights the increase in the level of confidence compared to the previous quarter.
The CIP/ISEG Global Activity Trend Indicator showed in August a relevant acceleration in economic activity in relation to July, reinforcing the growth trend started in May, supported by the increase in cement sales and the partial recovery of services, with a moderate contribution from retail trade.
Between July and September, automobile trade grew 14.7% in passenger car sales and 7% in merchandise sales, while industrial production rose 20.6% in automobile and component production and 17.5% in energy production, also reflecting the good performance of construction.
The current projection reinforces year-on-year growth compared to the previous quarter and presents only a slight slowdown in the chain, explained by base effects.
“Growth is thus supported by the increase in families’ disposable income – driven by budgetary measures, the dynamism of the labor market and lower financing costs – and by the progress in the execution of PRR funds, which should continue to translate into a reinforcement of public and private investment”, the document reads.
In terms of demand components, the outlook is for the contribution of domestic demand to the year-on-year variation in GDP to increase, to which could be added a worsening of the negative contribution of net external demand.