The Q3 2018 GDP flash estimate indicates Portugal grew +0.3% in Q3 compared to last quarter (q/q), after growing +0.6% in Q2. It registered its lowest q/q growth in more than two years. After stagnating in Q2, partly due to higher inflation dynamics, private consumption is expected to have picked up a bit. Compared to the same quarter last year (Q3 2017), GDP growth continued cruising above +2% (+2.1% y/y) as it has done in the last two years. The National Statistics institute indicated that domestic demand added less to y/y GDP growth while the contribution of net exports was again negative. Indeed, private consumption decelerated y/y despite the pick-up from Q2 2018. The unemployment rate is at its lowest level since 2002 (6.8%) and employment growth has been decelerating y/y for three straight quarters. Against this backdrop and with export demand projected to weaken going forward, we still expect Portugal to grow above +2% this year before decelerating to +1.9% next year.
