REGIONAL ECONOMY CONTINUED TO GROW, ALBEIT WITH A SLIGHT SLOWDOWN

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The Regional Indicator of Economic Activity (IRAE) reveals that, in May 2023, regional economic activity maintained its positive growth trajectory, despite a slight deceleration compared to the previous month.

As the Regional Directorate of Statistics of Madeira (DREM) stated in the first release of the IRAE, in October 2017, its purpose is to “signal the behavior of economic activity, namely with regard to its direction and magnitude of fluctuations: whether it is in positive or negative territory, accelerations, decelerations and the identification of turning points”. Its quantitative value is therefore of secondary importance, and it is not presented as a substitute for the real change in Gross Domestic Product, to be determined with a more varied and complete set of statistical information, although there is a strong correlation between the two variables.

In the note sent to newsrooms, DREM also presents a brief analysis of the main short-term indicators, divided by theme.

Economic Activity

As mentioned above, regional economic activity in May 2023 maintained its positive growth path, albeit at a slower pace than in the previous month.

The performance of the tourism sector made an important contribution to the growth of the economy, as overnight stays (excluding local accommodation below 10 beds) increased by 10.8% in that month, although below the 24.1% recorded in the previous April. A similar trend was seen in the average revenue per available room (RevPAR), which grew by 27.0% (39.3% in April).

The emission of electricity, an indicator usually associated with the evolution of economic activity, grew by 0.2% in May 2023, lower than that observed in the previous month (+0.6%). Reversing the situation of the previous month, in which it registered a decrease of 3.1%, the introduction in diesel consumption observed, in the month in reference, a growth of 0.8%.

When analyzing the ratio between incorporated and dissolved companies, it is observed that, in May 2023, 2.1 new companies were created for each dissolved company in the Region, a lower ratio than in the previous month (2.4).

Private Consumption

One of the indicators revealing the evolution of private consumption refers to the operations of the SIBS network with cards issued by national banks. Looking at the aggregate of the amounts of ATM withdrawals and purchases through automatic payment terminals, with national cards, there was a growth of 11.4% in May 2023, although slowing down compared to the previous month.

The introduction of gasoline consumption accelerated, with the year-on-year change standing at +18.5% in May 2023, when it had been +14.2% last April.

Consumer loans granted to households and non-profit institutions serving households have been showing negative changes since June 2022, a trend that continued in May 2023 (-19.6%).

In May 2023, sales of new passenger cars continued to grow (+34.8%), albeit at a slower pace than in the previous month (+86.6%).

Investment

While loans granted to households for housing (+0.3%; +0.7% in April) and the bank appraisal of housing (+17.0%; +16.3% in the previous month) showed a positive performance, the remaining indicators in the field of investment are, in May 2023, decreasing: the balance of loans granted to non-financial corporations (-1.8%; -4.7% in the previous month), the sale of cement (-2.9%; -3.9% in April) and the licensing of buildings (-9.0%; -9.4% in the previous month).

External Demand

Although trade with foreign countries is only a small slice of the overall trade that the Region carries out (most of which with the mainland), it should be noted that exports (+3.9%) grew and imports of goods (-6.4%) declined. The movement of goods in ports (+11.9%; +6.7% in the previous month), the most comprehensive indicator regarding the dynamics of trade with the outside world, increased. In the remaining indicators, and in May 2023, it is observed that the deceleration in the movement of passengers at airports (+21.6%; +39.3% in April) is in line with the evolution of the aggregate of the amounts of withdrawals from ATMs and purchases through automatic payment terminals, with international cards (+23.5%; +32.0% in the previous month).

Labor Market

Data from the bodies responsible for employment in the country and in the region show, in May 2023, a decrease in job offers (-29.9%) and increases in job applications (+10.5%) and registered unemployed throughout the month (+10.6%).

Prices

In May 2023, the year-on-year inflation rate, which stood at +4.4%, decelerated from the previous month (+6.6%), being equal in goods and services (+4.3%). Core inflation (excluding unprocessed food and energy) was +5.0% (7.1% in April).

Moti Shabi
Moti Shabi
Moti Shabi

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