By Andrea Hargraves 
After a year of continuous recovery and a very strong performance in the first three months of the year, the Portuguese economy felt the impact of the war in Ukraine and declined in the second quarter, in confrontation with the eurozone, registering a negative 0.2% change in GDP. However, the possibility that the growth rate compared to 2021 will still exceed 6% in 2022 as a whole is not excluded.
according to A quick estimate published this Friday by the National Institute of Statistics (INE) For National Accounts, Portugal’s GDP contracted, during the second quarter of this year, by 0.2% compared to the immediately preceding three months.
This negative divergence comes on the heels of 2.5% q/q growth in the first quarter (a slight downward revision compared to the 2.6% initially estimated), which was one of the best results among the Eurozone countries, and put the change in GDP compared to the same The period last year increased by 6.9%, which is a significant slowdown compared to the 11.8% reached in the first quarter of the year.
This weaker performance of the Portuguese economy in the second quarter of the year was already expected by most analysts, not only because of the particularly strong result in the first quarter, but mainly because European economies started to hurt in the second quarter. From the effects of the war in Ukraine in terms of prices, confidence of economic agents and trade flows.
However, the figures now known do not eliminate the possibility that Portugal, in the whole of 2022, will record a growth rate of more than 6%, as recently predicted by the Bank of Portugal and the European Commission. In fact, even if the GDP in the third and fourth quarters of this year recorded zero chain changes, the annual growth of the economy would be 6.2% in 2022.
In the European Commission’s summer forecast, it was already assumed that in the second quarter there will be a 0.2% decrease in GDP, which did not prevent Brussels from indicating 6.5% growth for the whole year.
In any case, the final outcome of this year will depend critically on how Portugal and its European partners are able, in the second half of this year, to respond to the difficult situation they face, with pressure on inflation and higher interest rates. The purchasing power of consumers and the threat of disruption to Russian gas supplies overshadow the prospects for some of the major economies in Europe.
The fact is that with negative growth in the second quarter, the Portuguese economy risks entering, if it returns to a negative result in the third quarter, into a technical recession, usually defined as a period of at least two consecutive quarters. With negative changes in GDP in the series.
Europe surprises and accelerates
At the moment, at the European level, the response of the economy has taken the positive side. The slowdown in the Portuguese economy occurred in conjunction with a slight acceleration in the eurozone, and Having emerged positively in the first quarter, Portugal’s economy is now, among the countries in the eurozone that presented new GDP data this Thursday, one of those with a weaker performance in the second quarter.
According to data released by Eurostat on Friday, GDP growth in the eurozone was 0.7%, up from 0.5% in the first quarter. The annual change in GDP decreased from 5.4% to 4%.
These results were clearly above expectations. Among most analysts, expectations were that the European economy would show, as early as the second quarter, the negative impact of the conflict in Ukraine on activity. The European Commission itself, in its summer forecast, indicated a stagnation in the gross domestic product of the eurozone in the second quarter.
What appears to have happened is that the three most important economies in southern Europe – France, Italy and Spain – posted big accelerations in the second quarter. In France, chain growth increased from -0.2% in the first quarter to 0.5% in the second, while in Italy it rose from 0.1% to 1% and in Spain from 0.2% to 1.1%.
He made up for the fact that Germany, the eurozone’s largest economy, had stalled. If in the first quarter it grew by 0.8%, then the change in GDP now compared to the immediately preceding quarter is zero, confirming fears that the country You could be on the verge of a recession.
It seems clear, looking at the second-quarter GDP data, that a difference in performance is starting to emerge within the eurozone economies, between those that feel most directly the effects of the war in Ukraine and those that, at least in the immediate, are less affected.
In any case, this growth is above expectations in the euro area in the second quarter, when combined with Another rise in the inflation rate in July to 8.9%reinforces expectations that the European Central Bank will, already at the meeting scheduled for September, continue its plans to raise interest rates, perhaps by another 0.5 percentage point, similar to what Happened at a meeting last week.