ExpertEye European Automotive Report Q1 2017 | Page 22

Portugal – Recovering construction industry supporting jobs
.
The Economic Sentiment Indicator continues to improve strongly, achieving
a nine year high in Q1, but unlike in many other countries this improvement
in market sentiment is failing to be reflected in RVs which have been all but
static for the last year.
On the economic front, Portugal continues to see steady overall growth in
GDP. 2017 is expected to continue to benefit from private consumption and
exports which were key drivers in 2016. The labour market continues to
improve thanks to tourism and a rebound in the construction industry which
is helping to drive down unemployment. With house prices jumping up 7.1%
in 2016, wages generally keeping pace with inflation and the socialist
minority government bringing the budget deficit down from 4.4% in 2015 to
2.1% of economic output there is a general feeling of optimism about the
sustainability of Portugal’s economic recovery.
There remains some downside threat from the challenges facing Portugal’s
banks but things are improving and the ratings agency DBRS recently
confirmed a BBB stable rating. In fact, this year the benchmark 10-year
Portuguese bonds have achieved just over a 4% return which is well ahead
of the generally negative returns of their euro zone peers, according to
Thomson Reuters data.
New car sales rose 17.8% in April 2017 which contrasts sharply with the 1.8%
decline seen in March. Before drawing too many conclusions it is worth remembering Q1 saw a significant amount of 2016 tactical registrations
European Automotive Report - 2017 Quarter 1
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