Monthly Economic Survey
GDP slows down in the first quarter mainly due to a deceleration in investment and in exports
- April 2008
20 May 2008
Accordingly to the flash estimate recently published by EUROSTAT, the Euro Area (EA) GDP in the 1st quarter was 2.2%, the same value as in the previous quarter. This figure reflects an heterogeneous behaviour of the EA main economies, with an acceleration in Germany, a stabilization in France and a slowdown in Spain1. Weighted by the Portuguese exports structure, the GDP of the main customer countries might have decelerated 0.3 p.p. to 2.5%. In April the EA economic sentiment and the consumer confidence indicators maintained the downward movement started in August.On the domestic side, the GDP flash estimate for the 1st quarter points to a year-on-year growth rate of 0.9%, 0.9 p.p. less than in the previous quarter. This slowdown might be connected to a less dynamic internal demand, mainly of investment, and to calendar effects (3 more working days in the 4th quarter of 2007 and 1 less in the 1st quarter of 2008 comparing with the same quarters a year before). The private consumption growth might have stabilized in the 1st quarter, due to the non-durable consumption acceleration and to the durable consumption deceleration. The investment indicator suggests a significant deceleration in the 1st quarter that might have resulted primarily of the construction component. In the international trade, in nominal terms, imports and exports decelerated in the 1st quarter, more intensely in the second case (-0.8 p.p. to 11.2% in imports and -1.2 p.p. to 4.6% in exports). Given the strong acceleration of oil prices in the 1st quarter, the slowdown of volume imports might have been more significant than in nominal terms. The supply side indicators, as the turnover and production indices, recorded lower year-on-year change rates in the 1st quarter of 2008 in relation to the 4th quarter of 2007. This evolution is mostly connected with the strong reductions registered in the year-on-year change rates in March, what might be associated in part to calendar effects (one more working day in February and two less in March than in the same months of 2007). The retail turnover index, however, is an exception, having registered an acceleration that might be connected with the fact that Easter in 2008 was in March while in 2007 had been in April.In April, year-on-year inflation was 2.5%, 0.6 p.p. less than in the previous month. The EA Harmonized Index of Consumer Prices (HIPC) and the Portuguese HIPC registered a larger differential in April (0.8 p.p.).The unemployment rate was 7.6% in the 1st quarter, 0.8 p.p. less than in the 1st quarter of 2007. Employment had a year-on-year growth rate of 1.1%, 0.2 p.p. more than in the 4th quarter of 2007.