Portugal's economy maintained its steady growth rate at 0.7% in the first quarter from the preceding three months, although year-on-year expansion slowed down as investment and private consumption decelerated, official data showed on Tuesday.

The National Statistics Institute (INE) said in its flash estimate that gross domestic product expanded 1.4% in the quarter from a year earlier, after 2.1% growth registered in the last three months of 2023.

"Although these figures reflect an expected economic slowdown compared to 2022 and 2023, they are positive for the Portuguese economy," Filipe Garcia, head of Informacao de Mercados Financeiros consultants, said.

"Growth is in line with Spain and above that in the main Western countries," he said, adding that these figures were perfectly compatible with the 2% growth forecast by the Bank of Portugal for this year, as the economic activity is expected to accelerate somewhat in the coming quarters.

 

Spain's

economic growth beat expectations with a 0.7% quarter-on-quarter expansion, while on an annual basis GDP grew 2.4%. The

euro zone economy

grew by 0.3% quarter-on-quarter for a 0.5% year-on-year rise, preliminary data showed.

Portugal's inflation also showed signs of subsiding. April's flash estimate came in at 2.2%, while core inflation, which strips out volatile food and energy prices, slipped to 2.0% year-on-year from 2.5% in March.

The new centre-right government said this month it expected the economy to grow 1.5% in 2024, which was the same number as predicted by the previous administration in November and down from 2.3% last year, although the forecast does not include the impact of its proposed tax cuts and wage hikes.

The central bank last month raised its 2024 economic growth forecast to 2.0% from 1.2%, but warned that could by hindered by policy uncertainty. (Reporting by Andrei Khalip and Patricia Rua, editing by Ed Osmond)