In July 2023

Regional economy accelerated

In July 2023, the Regional Indicator of Economic Activity (RIEA) revealed that the regional economic activity reinforced its growth trajectory, following three consecutive months of deceleration.

As DREM mentioned in the initial release of the RIEA in October 2017, its primary objective is to "signal the behaviour of economic activity, particularly concerning 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, therefore, assumes secondary importance and is not presented as a substitute for the real Gross Domestic Product change, which is determined using a more varied and comprehensive set of statistical information, although a strong correlation exists between the two variables.

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

Economic Activity

As mentioned earlier, the regional economic activity in July 2023 strengthened its growth trajectory, showing signs of acceleration compared to the previous month. The performance of the tourism sector contributed to economic growth, with overnight stays (excluding local accommodations with fewer than 10 beds) increasing by 1.2% in that month, though slightly lower than the 2.9% recorded in the preceding June.

The electricity distribution, which is closely linked with economic activity, grew by 2.4% in July 2023, surpassing the 1.4% observed in the previous month. Similarly, diesel consumption saw a 2.5% increase, rebounding from a 0.5% decline in the previous month.

Analysing the ratio between newly formed and dissolved companies, it was observed that in July 2023, 2.0 new companies were created for each company dissolved in the Region, a lower proportion than in the previous month (3.7).

Private Consumption

While the context, marked by an increase in national tourists, constrains this analysis, one of the indicators reflecting changes in private consumption pertains to operations with cards issued by national banks within the SIBS network. Observations of the combined amounts of withdrawals from ATMs and purchases through automated payment terminals using national cards showed an 8.3% growth in July 2023, maintaining a deceleration trend since the previous April.

The gasoline released for consumption accelerated, with a year-on-year change of +17.4% in July 2023, up from +16.6% in the previous June.

Consumer loans granted to households and non-profit institutions serving households grew by 2.8% in July 2023, slightly below the +3.2% observed the previous month.

Investment

Except for sales of new light commercial vehicles (+105.0%; +25.0% in the preceding June) and bank housing appraisals (+18.8%; +17.7% in the previous month), all other indicators in the realm of investment in the Autonomous Region of Madeira declined in July 2023. This includes loans granted to households for housing (-0.5%; -0.1% in the previous month), the balance of loans granted to non-financial corporations (-1.9%; -2.5% in the preceding month), cement sales (-4.7%; -9.4% in the last June) and building permits (-22.5%; -14.5% in the previous month).

External Demand

While trade with foreign countries accounts for a small portion of the region's overall trade (with most trade occurring with the mainland), it is noteworthy that both exports (-4.6%) and imports of goods (-2.8%) declined. However, the movement of goods in ports increased (+10.6%; +10.1% in the previous month), indicating a broader picture of trade dynamics with the exterior. In other indicators, it was observed that the slight deceleration in passenger movement at airports (+9.1%; +9.9% in the preceding June) is consistent with the trends in the combined amounts of ATM withdrawals and purchases made through automated payment terminals using international cards (+16.8%; +17.9% in the previous month).

Labour Market

Data from employment agencies both at the national and regional levels showed that in July 2023, job offers decreased by 15.3%, while job applications and the number of registered unemployed persons increased by 2.0% and 2.3%, respectively.

Prices

In July 2023, the year-on-year inflation rate, which stood at +3.2%, decelerated compared to the previous month (+3.8%). It was the same for services (+3.2%) and lower for goods (+3.1%). The underlying inflation rate (which excludes unprocessed food and energy products) was +3.8%.

For more information, please refer to:

• RIEA - In Focus (Portuguese only)

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