Portugal GDP Annual Growth Slows in Q1

Portugal's GDP rose by 1.6% year-on-year in Q1 2025, slowing from a 2.8% growth in the previous three-month period, according to preliminary estimates. The positive contribution of domestic demand to growth decreased in the first quarter due to a slowdown in private consumption. At the same time, the negative impact of net external demand became more pronounced, reflecting a deceleration in exports of goods and services. On a quarterly basis, the economy contracted by 0.5% in Q1, after a downwardly revised 1.4% rise in the previous period, contrary to analyst expectations of 0.4% growth.

The Portuguese economy expanded 2.8% year-on-year in the last three months of 2024, slightly higher than 2.7% in the preliminary estimate and above a downwardly revised 1.9% in Q3. It is the strongest economic performance in six quarters, with positive contribution of domestic demand to GDP growth rising to 3.1 percentage points from 2.9 percentage points in the third quarter, reflecting stronger private consumption despite a decline in investment. At the same time, the drag from net external demand eased to -0.3 percentage points from -1.0 percentage points, as exports slowed at a milder pace than imports. Compared to the previous quarter, the economy grew 1.5%, the best gain in almost three years, compared to a downwardly revised 0.2% in the third quarter of 2024. Considering full 2024, the Portuguese economy expanded 1.9%, below 2.6% in 2023.