Lisbon: Portugal's gross domestic product was flat in the second quarter as surging exports managed to offset a slump in domestic demand as austerity bites, data from the National Statistics Institute (INE) showed Thursday.
The second reading of Portugal's GDP for April-June confirmed that output was flat from the previous quarter after two straight quarters of declines that marked the beginning of a recession in the debt-laden country, Western Europe's poorest.
But year-on-year, GDP fell 0.9 per cent, dragged down by a sharp fall in internal demand as the Portuguese face higher taxes and tough spending cuts as the country grapples with the Eurozone debt crisis.
In the first quarter, GDP shrank by a revised 0.5 per cent year-on-year, INE said. The earlier estimate was for a 0.6 per cent contraction.
INE said exports surged 8.4 per cent in the second quarter from the same period last year while internal demand fell 5.2 per cent. Spain and Germany are Portugal's main export markets.
Avoiding sharper fall
"This is not a surprising number, there is a strong decline in internal demand due to austerity measures and foreign demand is avoiding a sharper fall in GDP," said Paula Carvalho, economist at Banco BPI. "Exports are performing very well."
Portugal has received a €78-billion (Dh400 billion) bailout from the European Union and IMF, under which it must reduce the budget deficit to 5.9 per cent of GDP this year from 9.2 per cent in 2010.
