Macro View

(reading time: 2 mins)

All in all, the deficit at Balance of Goods keeps increasing (+10.7%YoY in May and -9.3% of GDP), because of a strong domestic demand, despite Fiscal revenues are also outperforming. Meanwhile, Balance of Services account surplus is stabilizing (around 11.3% of GDP), mainly because Travel account surplus is growing at mid-single digit, May +6.5% and surplus 7.3% of GDP. As a result, Current Acccunt surplus 1.5% of GDP is now slightly below moving averages.           

The Bank of Portugal has just released May’s External Balance data.     

The main highlights are the following:

1 – Current Account Balance, in percentage of GDP, last 12 months: +1.5%. Compares with the 12MMA (12 months moving average): +1.8% and 3MMA: +1.6%;

2 – Balance of Goods (just goods, net), deficit: -9.4% of GDP (last 12M) vs. 12MMA: -9.1% and 3MMA: -9.3%;

3 – Balance of Goods, deficit, in May, went up 10.7%YoY vs. 12MMA: +10.6% and 3MMA: +20.4%;

4 – Balance of Services (just services, net; includes Travel Account Balance) surplus: +11.2% of GDP (last 12M) vs. 12MMA: 11.1% and 3MMA: 11.2%;

5 – Balance of Services, Surplus, in May, went up 1.6%YoY vs. 12MMA: 8.8% and 3MMA: 6.4%;    

4 – Travel Account Balance (just tourism revenues, net; a subcomponent of Services Account Balance) surplus is at +7.3% of GDP (last 12M) vs. 12MMA: +7.3% and 3MMA: +7.3%;

5 – Travel Account surplus, in May went up 6.5%YoY vs. 12MMA: +7.2% and 3MMA: +5.2%.

Our comments: External data in May suffered mainly from Primary Income, usually strongly negative in May due to dividends payment. However, Goods Balance deficit keeps increasing +10.7%YoY and in percentage of GDP, last 12 months 9.4%, above moving averages, while Balance of Services underperformed, surplus in May only +1.6%YoY and is consolidating around 11.2% of GDP. Finally, Travel Balance services, consolidates into the Services Account Balance, is showing signals of stabilization, surplus at 7.3% of GDP and surplus in May only +6.5%.           

Source: INE, BoP, AS Independent Research