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Slippage Evident In Portugal’s Current Account Balance

James Boston
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Slippage Evident In Portugal’s Current Account Balance

September fiscal data out of Portugal, which has just been released, is suggesting that the Current Account Balance for the month slipped back marginally. This brings an end to three straight months of current account expansion but the small magnitude of the fall means that this figure easily remains above the medium term average. Portugal’s Current Account showed a surplus of €563M for the full month of September compared to a balance of €635.9 for the month of August, the fall in the surplus however is nowhere near as significant as analysts had been forecasting, the market consensus was for a balance of just €343.6.

Regardless of a softening in the current account the Portuguese economy remains on course to post it’s first year of economic growth for almost four years. Government agencies are projecting a 1.0% GDP expansion for the full 2014 year. The recently published third quarter GDP figures would certainly back up the growth scenario but perhaps not to the full 1% extent being forecast by the authorities. The rate of economic expansion slipped in the third quarter to just 0.2% compared to 0.3% growth in Q2, this put the year on year growth rate at 0.9% which was down from the 1.0% experienced to the end of the second quarter.

The upshot is that Portugal will need to show some increase in it’s growth rate in Q4 if it is to meet the government target, but there is no significant pressure on the authorities to do so. Higher growth rates are always welcome but in Portugal’s case immediate international expectations are not that high and the markets are more concerned with the formation of a positive and stable trend. Portugal which is still mired in post bailout austerity expects to reach a growth rate of 1.5% in 2015.

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