January 20, 2021
Banco de Portugal released November data on external accounts. We highlight the following:
1 - The Current Account deficit as a percentage of GDP, last 12 months: -1.10% vs. -0.1% in November 2019 and Moving Average for the last 12 months (12MMA): -0.6% and 3MMA: -1.1% (since the beginning of the year: -1.0%);
2 - The negative balance of the Balance of Goods (goods only) as a percentage of GDP (last 12 months) is -5.80% vs. 12MMA: -7.10% and 3MMA: -6.0% (since the beginning of the year -5.6%);
3 - The negative balance of the Balance of Goods fell in October -39% homologous and compared with 12MMA: -30% and 3MMA: -41% (-33% in the year);
4 - The positive balance of the Travel and Tourism balance (tourism revenue only) as a percentage of GDP (last 12 months) was 2.70% vs. 12MMA: + 4.80% and 3MMA: + 3.00%;
5 - The positive balance of the Travel and Tourism Balance fell in November -60%, homologous and compared with 12MMA: -50% and 3MMA: -61% (accumulated in the year -61%).
The external accounts data in November, despite being negative, maintain the positive trend that characterizes this economic slowdown. In other words, unlike the last crisis, at the beginning of the 2010/11 period, the main external indicators were deeply unbalanced, with the Current Accounts registering a deficit close to 10% of GDP, which compares with a value of 1 today %; while tourism's net revenues are today slightly below the 3% of GDP reference, exactly as they were about 10 years ago. In fact, and as we have already written in the past, the deficit in the balance of goods is slightly below 6% vs. values close to 11% in 2010/11.
In summary, the Portuguese economy is undoubtedly much more balanced than it was 10 years ago, despite the fact that the pandemic caused a deterioration in the external accounts and once the European economy starts to run out of balance and registers recovery, a quick response from the Portuguese economy will be expected.
Source: BoP, AS Independent Research
António Seladas, CFA
AS Independent Research
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