Portugal avoids recession with growth in Q2

AFP

Lisbon

 Portugal, which exited a multi-billion euro bailout scheme in May, returned to growth in the second quarter, avoiding recession in spite of a banking crisis.

Portugal’s gross domestic product grew by 0.3% in between April and July, the National Institute of Statistics (INE) said yesterday.

The rebound “is mainly down to the progression of exports of goods and services,” the INE said in a statement.

The institute reduced its initial estimate of 0.6% growth in the second quarter.

Portugal’s economy shrank 0.5% in the first three months of 2014, slightly better than the 0.6% contraction the INE had reported initially.

Year on year, Portuguese GDP grew 0.9% in the second quarter following a 1% increase in the first three months of 2014 compared to the previous year.

Portugal narrowly avoided dipping back into recession — defined by two consecutive quarters of negative economic growth — after a prolonged period of contraction sparked by 2008’s financial crisis.

Its economy had been hamstrung by severe austerity measures imposed in return for a €78bn ($100bn) bailout in 2011 from the European Union and the International Monetary fund, which Lisbon exited in May.

The main driver of recovery has been an increase in exports, which grew 1.6% in the second quarter compared with the previous three months. As a result, foreign demand grew 0.8% between April and July, after being down 1.9% in the first quarter.

The INE also said on Monday that Portuguese exports were up 1.3% in July from the equivalent figure in 2013, slowing from a 7.2% year-on-year rise in June.

Portugal is one of several eurozone countries seeking to edge their way out of recession through increasing exports, as a trade surplus contributes to growth.

Consumer spending rose 1.7% following a 2.1% increase in the previous three months.

However, investments slowed sharply, growing by 4.3% in the first quarter compared to 13.4% between January and March.