Exports drive growth of Portuguese economy in 2006

15 November 2006

Lisbon, Portugal, 15 Nov – The Bank of Portugal has maintained its forecast for Portugal’s economic growth in 2006 of 1.2 percent, but changed the composition of that growth, saying now that exports would be practically the only driving force behind economic growth.

The Fall Economic Bulletin published Tuesday by the central bank showed that Portugal’s gross domestic product (GDP) would rise 1.2 percent in 2006, which is the same growth forecast given in the Summer Economic Bulletin.

However, the improvement in net exports is expected to account for 1.1 percentage points of that growth rate, which is a much higher amount than forecast in July (0.3 percentage points).

The central bank said it expected exports to rise 9.0 percent this year, or 0.6 percentage points higher than expected four months ago, driven by the recovery of sales of transport goods, intermediate goods and equipment.

Private spending is expected to increase 1.1 percent (1.2 percentage point lower than the July forecast) and public spending is expected to fall 0.2 percent.

With spending growing at a more moderate rate, imports are not expected to increase as much, with the Bank of Portugal now expecting a rise of 4.0 percent, against a 5.7 percent forecast previously.

The new figures from the central bank also show that investment is projected to fall 3.2 percent in 2006, a greater fall than the 1.2 percent forecast in the previous bulletin.

The Bank of Portugal’s forecasts are lower than those of the government, which expects Portuguese GDP to grow by 1.4 percent this year, after 0.4 percent growth in 2005.

The figures also show that, for the fifth year in a row, Portugal will move away from its Euro Zone partners, with per capita income lower than that in other Euro Zone countries. (macauhub)