Summary
Accordingly to the flash estimate published by EUROSTAT, in the Euro Area (EA) the GDP year-on-year growth rate in the 2nd quarter of 2008 was 1.5%, 0.6 percentage points (p.p.) less than in the previous quarter. This evolution resulted from the slowdown observed in the EA main economies, particularly in Spain, Germany and France (-0.9 p.p.). Weighted by the structure of the Portuguese exports, the GDP of the main costumer countries might have decelerated 0.7 p.p. to 1.7%. In the EA, the economic sentiment and the consumer confidence indicators reinforced in July the downward movement observed since August 2007.
On the domestic side, the GDP flash estimate for the 2nd quarter points to a year-on-year growth rate of 0.9%, the same value than in the previous quarter. On the one hand, external demand might have presented a less negative contribution, given the stronger slowdown of imports relatively to exports, but, on the other hand, domestic demand might have decelerated, as a result of the significant slowdown of private consumption. Concerning the international trade, both imports (from 12.3% to 9.0%) and exports (from 4.8% to 3.4%) registered a slowdown in nominal terms. The slowdown of imports in volume might have been more significant than in nominal terms given the acceleration of oil prices in the 2nd quarter. On the domestic demand level, private consumption might have decelerated in the 2nd quarter, as a consequence of the decrease observed both in non-durable and durable consumption, but mainly in the second. Accordingly to the available information, investment might have stabilized in the 2nd quarter, with a recovery in the construction component and a deterioration in the machinery and equipment and in the transport material components. On the supply side, the Short Term Indicators information revealed diverse evolutions in the sectors, between the 1st and the 2nd quarter. The economic climate indicator, available up to July, and the economic activity indicator, available until June, declined significantly.
The unemployment rate was 7.3% in the 2nd quarter, 0.6 p.p. less than in the 2nd quarter of 2007. Employment recorded a year-on-year growth rate of 1.4%, 0.3 p.p. more than in the 1st quarter of 2008.
In July, year-on-year inflation was 3.1%, 0.3 p.p. less than in the previous month. The differential between the EA Harmonized Index of Consumer Prices (HICP) and the Portuguese HICP increased 0.3 p.p. in July to 0.9 p.p..