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The Portuguese economy contracted by 7.6% in 2020, year-on-year, according to the quick estimate published by the National Institute of Statistics (INE), this Tuesday. The pandemic thus caused and anticipated the greatest recession of the Portuguese economy in Portugal since April 25 and, according to the available data consulted by Jornal Economico, at least since the 1960s. However, the fall was less than that expected by the State Government. budget for 2021 and by national and international institutions.
“In 2020 as a whole, GDP contracted by 7.6% in volume (growth of 2.2% in 2019), the most intense in the current series of National Accounts, reflecting the markedly adverse effects of the pandemic Covid-19. Economic activity ”, says the INE.
The Government projects a drop of 8.5%. Among the main national and international institutions, the most optimistic projection was that of the Bank of Portugal (BdP), which predicted that GDP would have fallen by 8.1% in 2020 and the most pessimistic in the IMF, which pointed to a fall in the 10%. The OECD projected a decrease of 8.4% of GDP, while the European Commission and the Public Finance Council estimated a decrease of 9.3%.
The INE explains that domestic demand had “an important negative contribution” to the fall in GDP, after having been positive in 2019, mainly reflecting the contraction of private consumption. The contribution of net external demand was also more negative in 2020, with sharp declines in exports and imports of goods and services, “with particular emphasis on the unprecedented decline in tourism exports.”
GDP grew 0.4% in the last quarter
GDP increased 0.4% in the fourth quarter of 2020, above expectations and compared to a 13.9% drop in the second quarter, followed by a 13.3% growth in the third quarter . “The contributions of domestic demand and net external demand to the variation of the GDP chain were positive,” explains the statistics agency.
Even so, in the year-on-year comparison, GDP fell by 5.9% in the last quarter of the year, when in the third quarter the fall had been 5.7%.
“The contribution of domestic demand to the annual variation of GDP was less negative than that observed in the third quarter, reflecting, to a large extent, the less intense decline in investment, despite the more pronounced reduction in private consumption”, indicates the INE. , explaining that net external demand had a more negative contribution in the fourth quarter, with a “more intense” decrease in exports of goods and services than that observed in imports of goods and services.
In the December Economic Bulletin, the BoP anticipated that GDP would have fallen 1.8% in chain and 8% year-on-year in the fourth quarter. At the time of the publication of the Economic Bulletin, Governor Mário Centeno stated that the contraction is “a consequence of the second wave of the pandemic and the measures that were adopted.”
However, last week he admitted that the last quarter could “behave very much in line with what the third quarter was from a growth point of view.”
Católica analysts anticipated a 9% year-on-year drop in the fourth quarter, as did ISEG, which forecast a 2.9% drop for the chain. The Competitiveness Forum projected a chain break in the fourth quarter of between 2% and 5%, which would have resulted in a year-on-year variation between 8% and 11%.
(Updated at 09:50 am)
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