Portugal's economy contracts unexpectedly, net exports fall

LISBON, May 2 (Reuters) - Portugal's economy unexpectedly contracted by 0.5% in the first quarter from the previous three months, when it grew 1.4%, as net exports dropped and global trade tensions jumped, official data showed on Friday.

Forecasts in a Reuters poll had pointed to growth of 0.4%.

Filipe Garcia, head of Informacao de Mercados Financeiros consultants, said "the available data on international trade in goods and tourism did not suggest such a negative evolution" even though there has been great market uncertainty over new U.S. import tariffs, most of which are still on hold.

He said the contraction could be related to the dollar's depreciation against the euro or a sharp increase in Portugal's imports in anticipation of a potential response by the European Union to tariffs announced by U.S. President Donald Trump.

The National Statistics Institute (INE) said in its flash estimate that gross domestic product still rose 1.6% in the first quarter from the same period a year earlier. In the fourth quarter, GDP expanded by a revised 2.8% year-on-year.

Portugal's preliminary data contrasts with the quarterly growth of 0.6% registered in Spain, the country's main trading partner.

INE said the contraction was due to the negative contribution of net exports to GDP, "while the domestic demand contribution was zero, after both being positive in the previous quarter".

Garcia said the zero contribution of domestic demand was not surprising and may be related to falling consumer and business confidence amid global geopolitical tensions.

The Bank of Portugal has forecast the economy should grow 2.3% this year in an acceleration from last year's 1.9%, but it said a tariff war could reduce that projected growth by 0.9 percentage points.