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28 June 2013
Economic weekly: Household increase savings again
Industrial production rose in Portugal for the second month in a row in May and confidence indicators
continued to improve in June. According to the national accounts, the Public Administrations net borrowing
deteriorated in the twelve months to Q1 2013. However, overall, Portugal’ net lending increased to 1.2% of
GDP in the twelve months to Q1 2013 after 0.3% of GDP in 2012. EU’s authorities reached an agreement
over the 2014-2020 EU Budget, bringing greater flexibility over how the bloc deploys the amount available
for spending.
Industrial production rises again in
In Portugal, Industrial production was up 4.4%yoy
(6.10%mom) in May 2013, after a first positive
change of 2.3%yoy in April. IP was up 4.5%qoq in
May. Unless there is a sharp deterioration in June,
today’s data could indicate that Q2 GDP growth will
turn out better than expected by most analysts, after
weaker than expected figures in Q4 2012 and Q1
2013.
EU Commission Confidence Indicators
improve in June
%yoy
Industrial Production
15
Euro area
10
5
0
-5
Portugal
-10
-15
-20
-25
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13
Source: National Statistics, Eurostat
Source:
Eurostat, INE,
INE and
Macrometria
Fonte: Eurostat,
INE
Macrometria
Meanwhile confidence indicators rose in June. The Portuguese ESI rose to 85.3 after 84.2, but remains 16.2
points below is long terma average. In the Euro área, the ESI rose from 89.5 to 91.3. Condidence indicators
have been on na upward trend since the beginning of the year, signalling that a stabilisation may be near. In
any case, news that the Federal Reserve may pull back somewhat from the current degree of monetary
policy easing may weigh on confidence over the summer.
Portuguese national accounts by institutional sector
Portuguese national accounts by institutional sector reported an overall rise in net lending of the Portuguese
economy, a deterioration in the net borrowing by the Public Administrations, a decline national income,
albeit less severe than that of GDP, and a new rise in household savings.
In the twelve months to Q1 2013, Portugal’s net lending rose to 1.2% of GDP, after 0.3% in 2012, due to an
improvement in the trade balance. However, the Public Administration net borrowing rose to 7.1% of GDP
in the twelve months to Q1 2013 after 6.4% of GDP in 212. According to the National Statistics, this was
due to the rise in social contributions in capital expenditure; the latter refers to a capital transfer of 700 M€
(1.8% of GDP) to a financial institution. These figures underscore the uncertainty related to the Budget
execution in 2013.
Against a background of of recession, unemployment and persistant uncertainty, the household saving rate
rose to 11.4% of Gross Adjusted Disposable Income in the twelve months to Q1 2013, after 10.2% in 2012.
National savings also rose to 18.9% of Gross Disposable Income. Saving rates have risen significantly in
the last years. Since December 2011, household savings rose 3.5 percentage points and national savings 4.4
percentage points, for precautionary motives
EU’s budget to be more flexible
Negotiations over how the bloc deploys the amount available for spending were finally settled this week as
the Parliament accepted a decline in the EU Budget against an improvement in the flexibility of its actual
implementation. It will now be easier to shift unused funds from one year to the next under the new
regulations.
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