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The growth cycle of the Portuguese economy worsened throughout 2022


Economics in a picture: The growth cycle of the Portuguese economy worsened throughout 2022

The last few decades have seen a great interest in the development of instruments to monitor the state of the economy, including the so-called business cycle clocks. In this graphical representation, the cyclical component of a broad set of series covering different dimensions of economic activity is typically obtained as the deviation from a long-term trend, called the growth cycle, and is represented in four quadrants that allude to the different phases of the cycle.

Through a counterclockwise reading, where 90° (270°) denote the peak (trough) of the business cycle, the circular clocks presented in Lourenço and Rua (2022) summarise these signals in a single direction (red arrow). The dispersion of these signals is illustrated by the number of series in each blue bar in the circular histogram and the confidence intervals associated with the mean direction are represented by an arc around it.

The reading of the clocks throughout 2022 signals a deterioration in the growth cycle of the Portuguese economy.

For more details, see Box 1 “Recent evolution of the Portuguese economy in the light of a circular clock” (in Portuguese only), published in the Economic Bulletin of Banco de Portugal, December 2022 and Lourenço, N. and Rua, A. (2022), “A circular business cycle clock for Portugal”, Banco de Portugal Economic Studies, Vol. VIII, No. 4.


Prepared by Nuno Lourenço. The analyses, opinions and findings expressed above represent the views of the author and not necessarily those of Banco de Portugal or the Eurosystem.


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