Portugal’s exports of goods in the first quarter of 2016 has experienced one of the largest drops in the past seven years due primarily to problems in Angola, China, Germany and Brazil.
The impact of lower world prices for raw materials including oil, and financial volatility are slowing Portugal’s recovery as Portugal’s export customers see their buying power melting away.
The data from the National Statistics Institute (INE) shows that the total exports of goods fell 2% in the first quarter of this year compared to the same period in 2015.
Depressingly, imports into Portugal increased by 1% in the same period, just the sort of double whammy that PM António Costa does not appreciate.
But the economy minister seems chipper enough despite the problems in the Angolan and Brazilian markets with Manuel Caldeira Cabral focusing on what he called “good growth” in the European Union.
This is not enough to lift the gloom as at the same time as Portugal’s exports were falling, goods imported to satisfy domestic demand increased, mostly due to a surprising rise in new car purchases.
During the first half of 2015, the Pedro Passos Coelho government lauded Portugal’s exporters and the country's improving trade balance, saying this was a result of government policy finally pulling the economy through.
But export performance is more down to foreign companies buying goods than Portugal selling them and with Portugal dependent on several sick, oil dependent economies, its exporters are having a rough time
The INE said that in Europe, Spain, France and Germany are Portugal’s biggest customers but the Germans bought 4.5% less product from Portugal which, despite Spain and France buying more, dragged the figures into negative territory.
The really big impact was from Angola which has cut 45% of its orders from Portugal. Angola’s domestic economy is pretty much oil-dependent and cuts have had to be made across the board by the Angolan government whose members have a habit of stealing the country's oil revenues rather than building up reserves to see it through periods of low barrel prices.
Assunção Cristas, the CDS leader, said that these setbacks are only partly due to uncertainty and political instability in Portugal’s export markets - in her opinion the "government is not doing enough to help businesses reach new markets."
Even Portugal’s new president, whose job it is to keep things calm and on track, said there is cause for concern and not to panic over the international situation as Europe has many positive signs and the drop in exports was due not to flawed government policy, but was down to an unfavorable global environment.
Whatever the reason, Portugal needs to diversify its exports to ensure a drop in orders from a major customer such as Angola does not hit the overall balance of trade figures with the sort of impact that the economy recently has experienced.
