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Portugal on track for export-led recovery: trade data

Published on 10/02/2014

Portugal is showing signs of an export-led recovery, with trade data released Monday revealing a big cut in the trade deficit last year.

Portuguese exports outside the European Union showed the strongest improvement, although the EU accounts for about two-thirds of all exports.

The country, fighting to emerge from a bailout programme but showing emergence from recession since the second quarter of last year, cut the trade deficit by 14.9 percent.

This is of critical importance for Portugal which, in common with other eurozone countries in deep trouble over their public finances, is trying raise its competitive position to boost exports while cutting public expenditure and in most cases with a fall in wages.

The trade balance provides a perspective of how the economy is performing in terms of what it needs imports for, and its ability to earn a living by exporting.

The outcome for the whole of last year was a deficit of 9.27 billion euros ($12.6 billion) from 10.9 billion euros in 2012.

The key driver of the economy, exports of goods and services, rose by 4.6 percent from the 2012 level to 47.3 billion euros.

However, this showed a slowing of the rate of growth from 5.7 percent in 2012.

Imports rose slightly by 0.8 percent to 56.6 billion euros, having slumped by 5.2 percent in 2012.

The latest figures from the statistics institute INE showed that exports paid for 83.6 percent of imports, up from 80.6 percent in 2012.

The main impetus by far came from outside the EU. Exports outside the union rose by 7.7 percent while exports to the rest of the EU rose by 3.4 percent.

A trade deficit tends to be a drag on other factors of growth in an economy. However a fall in imports can also be a sign of distress in an economy, notably owing to weak investment, stock building and consumer consumption.

In the last quarter of 2013, exports showed accelerating growth of 6.4 percent from performance in the same period of the previous year. This was pushed by a 44.0-percent rise in exports of fuels.

Meanwhile, imports rose by 3.3 percent owing to a 14.0-percent rise in purchases of equipment for transportation.

For this year, the creditors behind the bailout, the International Monetary Fund, the European Union and European Central Bank expect the economy to grow by 0.8 percent, with exports rising by 5.0 percent and imports rising by 2.5 percent.