Macro View

(reading time: 2 mins)

All in all, Current Account Balance, in September, remained positive, surplus 1.3% of GDP (last 12 months), slightly below 12MMA. Goods Account deficit keeps increasing, 9.7% of GDP, while Services surplus is consolidating around 11.1% of GDP; even so Tourism performance is slowing down, surplus in September only +4.9%YoY. So, strong domestic demand, consumption and probably investment, is pressuring the Goods Account Balance, deficit close to 10% of GDP, in the past, it was a reason to ask for foreign help; fortunately, nowadays, the Surplus at Services Balance more than offset the Deficit at Goods Balance.    

The Bank of Portugal has just released September’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): +1.6% and 3MMA: +1.3%;

2 – Balance of Goods (just goods, net), deficit: -9.7% of GDP (last 12M) vs. 12MMA: -9.2% and 3MMA: -9.6%;

3 – Balance of Goods, deficit, in September, went up 23.3%YoY vs. 12MMA: +18.6% and 3MMA: +12.3%;

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 September, went up 6.1%YoY vs. 12MMA: 8.3% and 3MMA: 6.7%;    

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: +7.2% and 3MMA: +7.2%;

5 – Travel Account surplus, in September went up 4.9%YoY vs. 12MMA: +6.2% and 3MMA: +6.2%.

Our comments: External data in September remains positive, namely Current Account, +1.3% of GDP last 12 months, even so slightly below 12MMA. The negative pressure at the Good Balance continues and is increasing, the deficit of Goods Balance, 9.7% of GDP, above moving averages is on its way to reach double digit. Meanwhile, Services account surplus, is stabilizing around 11.1% of GDP, as Travel surplus is also stabilizing around 7.3% of GDP (Tourism surplus in September only +4.9%YoY, below moving averages).

In a nutshell, the strong domestic demand, consumption and probably investment is pressuring the deficit at Goods balance, while Tourism performance is showing signals of slowdown, in September, only +4.9%YoY, fortunately other services continue to perform, as the Services Account Balance, in September, increased 6.1%YoY.

Source: INE, BoP, AS Independent Research