Portugal’s GDP recorded a 2.3% growth in 2023

The Portuguese economy grew 2.2% year-on-year and 0.8% quarter-on-quarter in the last quarter of 2023, escaping the technical recession and guaranteeing GDP growth of 2.3% for the whole year, Portugal’s national statistics institute INE revealed on Tuesday.

The growth of the Portuguese economy in the fourth quarter of 2023 came as a surprise, as the economists polled had expected GDP to grow between 1.2% and 2% year-on-year and between 0.6% and 0.1% quarter-on-quarter.

According to the first estimate from the National Statistics Institute (INE), the Portuguese economy grew by 2.2% at the end of 2023 compared to the same period of the previous year and by 0.8% compared to the third quarter, thus avoiding a technical recession, after GDP contracted by 0.2% year-on-year in the penultimate quarter of the year.

For 2023, GDP grew by 2.3%, in line with the 2.2% target expected by the government, following the 6.8% increase in 2022, the highest since 1987.

Economy Minister António Costa Silva said that Portugal “keeps disproving the most pessimistic projections” and that the economy’s better-than-expected growth above expectations gives confidence for a future marked by geopolitical tensions.

“I think the news is very positive for Portugal and the Portuguese economy, all the indicators show growth above all the expectations that existed, including the government’s expectations,” Costa Silva told Lusa after the release of GDP data for 2023 by INE.

According to INE, the Portuguese economy grew 2.2% year-on-year and 0.8% quarter-on-quarter in the last quarter of 2023, escaping the technical recession and guaranteeing GDP growth of 2.3% for the whole year.

Exports, on the other hand, fell by 1.9% and imports by 5.4% in the fourth quarter of 2023 compared to the same period in 2022, while the economic climate indicator, which reflects business expectations, rose between November and January, reversing the downward trend seen between July and October, and the consumer confidence indicator also increased.

“The Portuguese economy is always disproving the most pessimistic and catastrophic projections,” stressed the minister, who wanted to leave “a message of great serenity and confidence in the future”.

Costa Silva highlighted, among other sectors, the performance of tourism, which reached “record” revenues worth €27 billion last year, as well as the metalworking industry, which was 5% above the exports recorded in 2022, and the accessories industry, which grew by 10%.

As for investment, which decreased in 2023, Costa Silva stressed that foreign direct investment, as the Portuguese Agency for Investment and Foreign Trade Agency (Aicep) reported, reached around €3.5 billion, “significantly above” the previous year.

“If we continue with what we expect for 2024, which is the decline in inflation, […] and if it is combined with the decline in interest rates from the European Central Bank, we can expect very positive news for the economy in 2024,” he said.

For this year, the economy minister pointed to the three simultaneous wars that are taking place and the economic stagnation in Germany as elements that cause “some concern”.

(Ânia de Ataíde e Maria João Pereira, Lusa.pt)