(Reuters) – The pace of Portugal’s economic growth doubled to 11.9% in the first quarter from a year earlier and accelerated from the preceding quarter, in contrast to a slowdown in Europe, thanks to robust private consumption and rebounding tourism.
In its second reading of quarterly gross domestic product, the National Statistics Institute confirmed on Tuesday its flash estimates released a month ago, including the quarter-on-quarter expansion of 2.6%, up from 1.7% in the fourth quarter of 2021.
“The numbers are very good, Portugal leads the euro zone in terms of growth, which is being boosted by private consumption and a solid recovery in tourism activity, which should continue to support growth in the summer,” said Paulo Rosa, senior economist at Banco Carregosa.
Still, he cautioned that “if high inflation persists, it will be a huge risk, and economic growth should start slowing down after the summer, not least because the European Central Bank is expected to start raising interest rates soon, which should reduce the disposable income”.
The INE said separately consumer prices spiked 8% year-on-year in May, at their fastest pace since February 1993, stoked by soaring energy and commodity prices following Russia’s invasion of Ukraine.
Citing the inflationary impact of the conflict in Ukraine, Portugal’s government last month trimmed its economic growth outlook for this year to 4.9%, in line with last year’s rebound from the pandemic-induced recession of 2020.
The INE said private consumption increased 2.2% between January and March against the previous three months and soared 12.6% compared to a year ago, while investment grew 3.3% and 5.8%, respectively.
Exports increased 1.7% from the previous quarter and 18.3% from a year ago, driven by services such as tourism that is showing a strong recovery after being hard hit by COVID-19 restrictions.
(Reporting by Sergio Goncalves, Mariana Ferreira Azevedo; editing by Andrei Khalip and Bernadette Baum)