Portugal’s economy expanded for a second quarter in the three months through September, even as growth slowed amid a continued contraction of domestic demand and a rise in imports.
Gross domestic product rose 0.2 percent from the second quarter, when it rose 1.1 percent, the Lisbon-based National Statistics Institute said in a preliminary report today. Economists predicted an increase of 0.3 percent, the median of six estimates in a Bloomberg survey showed. GDP dropped 1 percent from a year earlier.
“It seems the economy is touching bottom,” Vitor Bento, economist and chairman of payment-processing company SIBS SA said at a conference in Lisbon today. The question now is whether the country can grow at a sustainable path, he said.
Portugal’s government raised its 2014 growth forecast on Oct. 3 to 0.8 percent from 0.6 percent, and said it expects the economy will shrink 1.8 percent this year, less than its previous estimate of 2.3 percent. The nation’s jobless rate dropped to 15.6 percent in the three months through September after exports lifted the economy out of a 2 1/2 yearlong recession in the second quarter.
While the economy seems to be picking up, Prime Minister Pedro Passos Coelho still has to trim spending by about 3.2 billion euros ($4.3 billion) next year to meet the terms of a 78 billion-euro aid plan from the European Union and the International Monetary Fund, after relying mainly on tax increases this year.
Domestic demand shrank at a slower pace in the third quarter than a year ago, the statistics institute said. The contribution of net trade decreased as imports accelerated, it said.
The euro area’s recovery came close to a halt in the third quarter as German growth slowed, France’s economy unexpectedly shrank and Italy extended its record-long recession. Euro-area unemployment stands at a record 12.2 percent and the European Central Bank cut its benchmark rate to an all-time low of 0.25 percent last week to fight low inflation and rekindle growth.