Portugal Economy Showing Strong Growth

Portugal has something more to celebrate than winning the Eurovision song contest. The economy grew at its strongest pace in nearly a decade in the first three month of the year. It expanded 2.8% compared to the same period last year and was up 1% from the previous quarter.

The better than expected GDP performance was helped by strong exports and improved investment as well as tourism, Euronews reported.

“These positive numbers confirm continuous growth that began in mid-2013 and also an acceleration of the pace of the expansion, which is new,” said Filipe Garcia, head of Informacao de Mercados Financeiros consultants in Porto.

He attributed growth to a wider European setting of super low interest rates, European Central Bank’s bond-buying program that reduces country risk, as well as Portugal’s own improvements, principally its tourism boom and a real estate market that has lured foreign investment.

In its first reading of gross domestic product, the National Statistics Institute said the economy expanded 1% in the first quarter from the last three months of 2016, when it grew a revised 0.7%.

Year-on-year growth accelerated from 2% in the last quarter of 2016. The INE said exports and investment helped push growth higher from a year earlier while private consumption was decelerating—factors analysts said pointed to more sustainable growth than last year.

The budget deficit fell to a record low last year though Portugal still has one of the eurozone’s highest levels of public debt.

Last month the government forecast that growth for the whole of this year will be 8%.  

The country has also benefited from an increase in overseas visitors as part of the switch to Mediterranean destinations because of security concerns. Portugal’s tourism revenue rose by more than 10% last year reaching a record €12.6 billion ($13.9 billion).