Portuguese economy goes from deficit to surplus of 2.100 ME in 1st semester

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The Portuguese economy posted an external surplus of 2.1 billion euros in the first half of the year, compared to a deficit of 2.9 billion euros in the same period last year, the Bank of Portugal (BdP) announced today.

According to the balance of payments data published by the banking regulator, this reflects a 531 million euro reduction in the goods balance deficit, as exports grew more than imports (1,223 million euros and 692 million euros, or 3.3% and 1.4% respectively), as well as an increase in the services balance surplus of 3,808 million euros, with the travel and tourism balance accounting for more than half of the variation with an increase of 1,942 million euros.

It also reflects an increase in the capital account surplus of 725 million euros, due essentially to the greater receipt of investment aid and the greater transfer of carbon licenses.

According to the BdP, the Portuguese economy’s financing capacity in the first half of the year resulted in a financial balance of 2,849 million euros, reflecting the increase in foreign assets of 6,690 million euros, resulting from investment by public administrations and banks in securities issued by non-residents (2,863 million euros and 945 million euros, respectively), as well as the increase in loans granted by companies to non-resident entities (2,339 million euros).

It also reflects the increase in liabilities of 3,841 million euros, mainly due to the increase in non-resident deposits with national banks (8,157 million euros), which was partially offset by the reduction in the central bank’s external liabilities (-5,805 million euros).

The BdP detailed that the sectors that contributed most to the positive change in Portugal’s net assets compared to the rest of the world were the central bank (6,981 million euros), general government (4,417 million euros), and non-monetary financial institutions (1,578 million euros).

The country’s international investment position went from -84.7% of annual GDP (-202.7 billion euros) at the end of 2022 to -77.6% of GDP (-195.6 billion euros) at the end of June 2023, the least negative ratio of the international investment position since the third quarter of 2006.

As for net external debt, it fell from 67.6% of GDP (161.6 billion euros) at the end of 2022 to 61.4% (154.7 billion euros) in the second quarter of 2023, the lowest ratio since June 2007.

Looking at the month of June, the current and capital account balance was 1.6 billion euros, corresponding to an increase of 1.1 billion euros compared to the same month in 2022, which translates into an increase of 1.064 billion euros compared to the same month last year, as a result of the 265 million euro reduction in the deficit on the goods account, to 1.912 billion euros.

Compared to the same month in 2022, this reduction was due to decreases in imports, of 510 million euros (5.6%), and exports, of 246 million euros (3.6%), and an increase in the surplus in the balance of services, of 800 million euros, to 2,574 million euros.

Exports and imports of services increased by 22.3% and 1.9% respectively compared to June 2022, mainly reflecting the contribution of travel and tourism (+297 million euros) and transport services (+214 million euros).

Travel and tourism exports totaled 2,111 million euros, the highest figure in the series for a month in June.

Iris Lavan
Iris Lavan
With a background as a consultant in the medical industry, Iris Lavan brings a wealth of knowledge and expertise to Portugal Pulse. Iris also runs a company in Tel Aviv offering marketing, business development, content creation and public relations services. She holds a degree in economics and management, giving her a solid grounding in business strategy and financial planning. Iris' commitment to Portugal Pulse is reflected not only in her consulting career, but also in her impact on the Portugale media landscape in Israel. She was an interviewer for Hadshot Portugal חדשות פורטוגל, a media outlet that broadcasts news about Portugal in Hebrew, where she provided valuable information on current affairs, healthcare and the economy. Since July 2023, Iris has also been part of the Portugal Pulse team.

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