In August 2023

Regional economy continued to accelerate

In August 2023, the Regional Indicator of Economic Activity (RIEA) revealed that regional economic activity strengthened its growth trajectory compared to the previous month, marking two consecutive months of acceleration.

As DREM (Regional Directorate of Statistics of Madeira) mentioned in the initial release of the RIEA in October 2017, its objective is to "signal the behaviour of economic activity, especially in terms of its direction and the magnitude of fluctuations: whether it is in positive or negative territory, accelerations, decelerations, and the identification of turning points." Its quantitative value is therefore of secondary importance and is not presented as a substitute for the real Gross Domestic Product (GDP) change, which is determined using a more varied and comprehensive set of statistical information. Nevertheless, there is a strong correlation between the two variables.

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

Economic Activity

As previously mentioned, regional economic activity in August 2023 continued its positive growth trajectory, showing signs of acceleration compared to the previous month. The performance of the tourism sector contributed to economic growth, as overnight stays (excluding local accommodation with fewer than 10 beds) increased by 0.1% this month, although lower than the 1.2% recorded in the previous July. It is noteworthy that total revenue in tourist accommodation increased by 13.4% (compared to 14.2% in July).

The electricity distribution, which is closely linked with economic activity, grew by 3.8% in August 2023, surpassing the 2.4% increase in the previous month. However, diesel consumption decreased by 0.5% after a 2.5% increase in the previous month.

Analysing the ratio between newly formed and dissolved companies, it can be observed that in August 2023, 1.7 new companies were created for every company dissolved in the region, a ratio lower than that of the previous month (2.0).

Private Consumption

Although the current context of increased national tourism limits this analysis, one of the indicators of private consumption is related to the operations of the SIBS network, which includes cards issued by national banks. Observing the aggregate of withdrawals from ATMs and purchases through automatic payment terminals with national cards, there was an 8.1% growth in August 2023, continuing the deceleration observed since the previous April.

Gasoline released for consumption decelerated, with a year-on-year change of +14.9% in August 2023, down from +17.4% in the previous July.

Consumer loans granted to households and non-profit institutions serving households increased by 2.0% in August 2023, down from the 2.8% observed in the previous month.

Investment

In this domain, indicators can be categorised into two groups: those with a positive trend, such as new light commercial vehicle sales (+112.4%; +105.0% in the previous July), bank housing appraisals (+20.4%; +18.8% in the preceding month), and building permits (+2.1%; -22.5% in the previous month); and those in decline, such as loans granted to households for housing (-0.9%; -0.5% in July 2023), the balance of loans granted to non-financial corporations (-2.5%; -1.9% in the previous month), and cement sales (-3.8%; -4.7% in the last July).

External Demand

While foreign trade represents a small portion of the region's overall trade (most of which is with the mainland), it is noteworthy that both exports (-14.6%) and imports of goods (-4.0%) decreased. On the other hand, the movement of goods in ports (+3.8%; +10.6% in the previous month), a more comprehensive indicator in terms of foreign trade dynamics, increased, albeit at a slower rate. In other indicators for August 2023, a deceleration in passenger movements at airports (+7.0%; +9.1% in the previous July) corresponds with the evolution of the aggregate amounts withdrawn from ATMs and purchases made through automatic payment terminals with international cards (+15.5%; +16.8% in the preceding month).

Labour Market

Data from employment agencies in the country and the region show that in August 2023, there were reductions in job offers (-19.9%), job applications (-5.8%), and registered unemployed persons throughout the month (-5.7%).

Prices

In August 2023, the year-on-year inflation rate, which stood at +3.8%, accelerated compared to the previous month (+3.2%). Inflation was higher in goods (+4.2%) and lower in services (+2.9%). The underlying inflation rate (which excludes unprocessed food and energy products) was +3.6%.

For more information, please refer to:

• RIEA - In Focus (Portuguese only)

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