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In a nutshell, external data in January, remained on the weak side, namely Services surplus, -7.8%YoY, despite Travel surplus: +2.2%YoY, and only 10.7% of GDP, below moving averages. Meanwhile, Goods Balance deficit +12%YoY, in % of the GDP -9.6%; keeps increasing, as domestic demand remains strong.

The Bank of Portugal released (Friday, March 20) January’s External Balance data.     

The main highlights are the following:

1 – Current Account Balance, in percentage of GDP, last 12 months: 1.09%. Compares with the 12MMA (12 months moving average): +1.3% and 3MMA: +1.1%;

2 – Balance of Goods (just goods, net), deficit: -9.6% of GDP (last 12M) vs. 12MMA: -9.5% and 3MMA: -9.6%;

3 – Balance of Goods, deficit, in January, increased 12%YoY vs. 12MMA: +17.1% and 3MMA: +2.9%;

4 – Balance of Services (just services, net; includes Travel Account Balance) surplus: +10.7% of GDP (last 12M) vs. 12MMA: 10.9% and 3MMA: 10.8%;

5 – Balance of Services, Surplus, in January, went down -7.8%YoY vs. 12MMA: 2.1% and 3MMA: -6.8%;    

4 – Travel Account Balance (just tourism revenues, net; a subcomponent of Services Account Balance) surplus is at +7.1% of GDP (last 12M) vs. 12MMA: +7.2% and 3MMA: +7.2%;

5 – Travel Account surplus, in January went up 2.2%YoY vs. 12MMA: +4.2% and 3MMA: +0.6%.

Our comments: The external position of the Portuguese economy continues to deteriorate; Current Account Balance was only marginally positive in January; while the surplus over the last 12 months is at 1.09%; below moving averages. It is mainly the Goods account deficit that keeps increasing, in January +12%YoY, deficit over the last 12 months, 9.6% of GDP, while the Services Account surplus is losing traction, in January -7.8%YoY (the 3^RD negative month in a row) and surplus 10.7% of GDP, over the last 12 months, slightly below moving averages. Travel surplus is still growing, in January, +2.2%YoY, however figures are close to flat.

Source: INE, BoP, AS Independent Research