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Portugal’s exports slump 40% in second quarter, stoking record GDP fall

108economy contractionPortugal’s record economic contraction in the second quarter saw exports of goods and services plunge by 40% as the coronavirus eroded revenue from overseas tourists, a breakdown of official GDP data showed on Monday.

Tourism is classified as an export under Portugal’s GDP calculations because the sector brings in money from overseas. It was the sector worst affected by the pandemic.

Data from the National Statistics Institute (INE) confirmed its previous estimate that, between April and June, gross domestic product shrank 16.3% from a year earlier and 13.9% from the preceding quarter. It gave a breakdown of GDP components such as domestic and external demand.

Exports of goods and services fell by around 40% from a year earlier to 13.3 billion euros in the second quarter of 2020, the data showed. Exports of just services, which are predominantly tourism-related, plunged 56% to around 3 billion euros.

Private consumption dropped by around 14% to 28 billion euros in the second quarter from a year earlier and investment fell nearly 11% to around 9 billion euros, together accounting for most of the steep GDP contraction.

“It was a brutal stop that the Portuguese economy had and we are still only (seeing) the tip of the iceberg,” President Marcelo Rebelo de Sousa told reporters after the data was released today.

Though tourism activity picked up in July from the previous month, according to a separate INE release, the coronavirus outbreak still devastated the industry as travel restrictions kept visitors from Britain – Portugal’s largest market – away until late August.

The number of foreign tourists visiting Portugal in July was down 83% from a year earlier to around 305,800, while in June the fall was of 96%.

Portugal’s unemployment rate rose to 8.1% in July from 7.3% in June, according to INE.

“We have to get the country out of the economic recession and fight unemployment,” Prime Minister Antonio Costa said. “We are going to respond to this crisis with the same determination we had to overcome the previous one” in 2010-14, he said.