Macro View

(reading time: 2 mins)

In a nutshell, external data in November remained positive, namely the Current Account surplus, in percentage of GDP, last 12 months, 1.3%, in line with 12MMA but below 3MMA. In fact, the Travel Account Balance surplus in November went up only +1.4%YoY, below the moving averages, while the Balance of Services surplus went down 3.4%YoY. So, apparently, the “Tourism miracle” that strongly contributed to the External figures is calming down. The huge deficit of the Goods Balance, 9.5% of GDP; remains the main concern.            

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

The main highlights are the following:

1 – Current Account Balance, in percentage of GDP, last 12 months: 1.3%. Compares with the 12MMA (12 months moving average): +1.5% and 3MMA: +1.3%;

2 – Balance of Goods (just goods, net), deficit: -9.5% of GDP (last 12M) vs. 12MMA: -9.3% and 3MMA: -9.6%;

3 – Balance of Goods, deficit, in November, went up 1.8%YoY vs. 12MMA: +17.0% and 3MMA: +6.8%;

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

5 – Balance of Services, Surplus, in November, went down -3.4%YoY vs. 12MMA: 7.6% and 3MMA: 4.3%;    

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

5 – Travel Account surplus, in November went up 1.4%YoY vs. 12MMA: +5.8% and 3MMA: +4.4%.

Our comments: The external position of the Portuguese economy is stabilizing (please see graphs below). The major balances are almost in line with 12MMA. Nevertheless, the Travel Account surplus in November went up only 1.4%YoY, below moving averages, while the surplus at the Balance of Services went down 3.4%YoY. Fortunately, the Balance of Goods deficit increased only 1.8%YoY.

Summing up, the strong contribution of Travel to the Services Balance and external figures over the last few years is calming down. So, it’s important the Balance of Goods deficit also calm down, to keep the Current Account positive.              

Source: INE, BoP, AS Independent Research