Portuguese economy maintains strong growth but slows down in early June, signals Banco de Portugal

The Portuguese economy continues to grow at a strong pace compared to last year – close to 20% – although not as intense as in mid-May, when it approached 30%. And the pace of homologous expansion slowed down again in early June. This is what signals the daily economic activity indicator (DEI), published by Banco de Portugal (BdP), whose data were updated this Friday.

According to a note from the BdP, published on its website, in the week ending June 6th the DEI showed “a decrease compared to the previous week”.

The weekly moving average of the DEI, that week – which covers the period between 31 May and 6 June – indicates a year-on-year growth in economic activity in Portugal of 19.8%. This was when the same moving average for the week ended May 30 signaled an increase of 22.7% year on year.

It was the third consecutive week of the DEI’s slowdown. Throughout the month of May, this composite indicator, which seeks to draw an almost real-time picture of the evolution of the Portuguese economy, grew by more than 20% (weekly moving averages) in year-on-year terms. But this growth reached 28.7% in the week ending May 16th.

In this evolution, it is necessary to take into account that in May of last year the process of reopening the Portuguese economy took place, after the first general confinement, in March and April 2020, to stop the covid-19 pandemic. A reopening that in early June took a new step, with larger stores or those located in shopping centers opening again, such as pre-school education. In other words, as of June 2020, the country’s deconfinement was, to a large extent, done.

In other words, the comparison of the evolution of the activity started to be made with a period of 2020 in which the country had already lost its confidence and the economy was in the process of recovery.

The BdP also calculates the biennial DEI rate which, in practice, shows us the accumulated growth in this indicator between 2019 and 2021. This rate, in terms of weekly moving average, has, as a rule, been in positive territory since the end of April and throughout May – although still at low values ​​-, signaling that economic activity was already operating slightly above the pre-crisis level.

However, this biennial DEI rate turned negative again in the week ending June 6, with a change of -0.9%, indicating that economic activity was slightly below the pre-crisis level that week.

The DEI summarizes a set of quantitative information and daily frequency, such as road traffic of heavy commercial vehicles on motorways, consumption of electricity and natural gas, cargo and mail unloaded at national airports and purchases made with cards in Portugal by residents and non-residents. Therefore, it makes it possible to draw, almost in real time, a picture of the evolution of economic activity in the country.

The updated data are released weekly by Banco de Portugal, on Thursdays – this week the update took place exceptionally on Fridays -, with information up to the previous Sunday. The information provided refers to the daily values ​​and the weekly moving average of this indicator.

Source: Expresso by expresso.pt.

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