Summary
The net borrowing of the Portuguese economy decreased to 2.0% of GDP in the year ending in the 2nd quarter of 2012 (4.2% in the previous quarter). This evolution reflected improvements in all institutional sectors’ balances.
In the case of households it should be stressed the increase of net lending, as well as the raise in the current savings despite the decline in disposable income. In fact, reflecting a steeper reduction in consumption than for disposable income, the household savings rate reached 10.9%, 0.2 percentage points (p.p.) more than that observed in the year ended in the 1st quarter.
Non-financial corporations decreased their net borrowing by 0.3 p.p. to 4% of GDP, mainly reflecting the contraction of both in investment and in current expenditures, namely with employees’ compensations. Financial corporations recorded a net lending of 0.5% of GDP, improving their balance by 0.9 p.p. comparing with the rate observed in the previous quarter.
General government’s net borrowing also decreased due to a more intense reduction of public expenditure than the decrease in revenues. In the 1st semester of 2012 the net borrowing stood at 6.8% of GDP, while in the same period of 2011 it was 8.2%.
Unit labour costs accentuated their decreased mainly as a result of the decrease in the average pay per worker which was particularly significant in the general government sector.