In June 2023

Regional economy continued to grow, albeit at a slightly slower pace

The Regional Indicator of Economic Activity (RIEA) reveals that in the month of June 2023, regional economic activity expanded, but at a slower rate compared to the previous month.

As previously mentioned, the primary purpose of the RIEA, as indicated by the DREM in its initial release in October 2017, is to "signal the behaviour of economic activity, particularly with regard to its direction and magnitude of fluctuations: whether it is in a positive or negative trend, accelerations, decelerations, and identifying turning points." Therefore, its quantitative value assumes secondary importance, as it is not intended to substitute for the actual change of the Gross Domestic Product, which is determined through a broader and more comprehensive set of statistical data, even though a strong correlation exists between the two variables.

Monthly Economic Survey – The economic situation of the Autonomous Region of Madeira in June 2023 from 6 topics

DREM presents a brief analysis of the main short-term indicators, broken down by theme.

Economic Activity

As mentioned earlier, regional economic activity in June 2023 continued its positive growth trajectory, although at a slower pace compared to the previous month, marking 27 consecutive months of growth, albeit with varying intensity.

The tourism sector's performance contributed to economic growth, with overnight stays (excluding local accommodation with fewer than 10 beds) increasing by 2.9% in that month, though this growth rate was lower than the 10.8% recorded in the previous May. A similar trend is observed in Revenue Per Available Room (RevPAR), which grew by 18.5% (compared to 27.0% in May).

Electricity generation, typically associated with economic activity, saw a growth of 1.4% in June 2023, surpassing the 0.2% observed in the previous month. On the other hand, diesel released for consumption decreased by 0.5% in June after an increase of 0.8% in the previous month.

When analysing the relationship between newly formed and dissolved companies, it is noted that in June 2023, 3.7 new companies were created for each company dissolved in the region, a significantly higher proportion than in the previous month (2.1).

Private Consumption

One of the indicators reflecting the evolution of private consumption relates to transactions through the SIBS network using cards issued by national banks. Observing the aggregate of ATM withdrawals and purchases through automatic payment terminals using national cards, there was an 8.7% growth in June 2023, continuing the deceleration trend observed since April.

Gasoline released for consumption also decelerated, with a year-on-year change of +16.6% in June 2023, compared to +18.5% in the previous May.

Consumer loans granted to households and non-profit institutions serving households, which had been declining since June 2022, reversed course and grew by 3.2% in June 2023.

Investment

With the exception of sales of new light commercial vehicles (+9.0%; -36.7% in the previous May) and housing bank appraisals (+17.7%; +17.0% in the previous month), all other indicators in the Investment domain declined: loans granted to households for housing (-0.1%; +0.3% in the previous May), the balance of loans granted to non-financial corporations (-2.5%; -1.8% in the previous month), cement sales (-9.4%; -2.9% in the previous month), and building permits (-14.5%; -9.0% in the previous month).

External Demand

While foreign trade represents only a small portion of the region's overall trade (most of which is with mainland Portugal), it is noteworthy that both exports (-2.4%) and imports of goods (-4.5%) decreased. Conversely, the movement of goods in ports (+10.1%; +11.9% in the previous month), a more comprehensive indicator of foreign trade dynamics, increased. In other indicators for June 2023, it is observed that the deceleration in passenger traffic at airports (+9.9%; +21.6% in the previous May) aligns with the trend in the aggregate of ATM withdrawals and purchases through automatic payment terminals using international cards (+17.9%; +23.5% in the previous month).

Labor Market

Data from employment agencies in the country and the region show a decrease in job offers (-18.2%; -29.9% in the previous May) and an increase in job requests and registered unemployed persons during the month (+5.8% in both indicators) in June 2023.

Prices

In June 2023, the year-on-year inflation rate, which stood at +3.8%, decelerated compared to the previous month (+4.4%), with inflation being lower in goods (+3.6%) than in services (+4.0%). The underlying inflation rate (which excludes unprocessed food and energy products) was +4.7%.

For more information, please refer to:

• RIEA - In Focus (Portuguese only)

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