LISBON (Reuters) - Portugal's economy picked up pace in the fourth quarter, putting the country on a stronger footing to exit its international bailout later this year, data showed on Friday.
Gross domestic product grew 0.5 percent in the fourth quarter from the third, accelerating from the previous quarter's revised 0.3 percent growth.
Growth in the fourth quarter was higher than expected - the average estimate by analysts surveyed by Reuters was for no change in output. Internal demand made its first positive contribution since 2010, national statistics institute INE said.
"This is great news and beat our expectations," said Paula Carvalho, chief economist at Banco BPI. "The highlights are private consumption and net exports - internal demand is stabilizing and there are more sales abroad."
The data showed that GDP contracted by 1.4 percent through all of 2013 - less than the government's forecast of a 1.8 percent drop. In 2012 GDP slumped 3.2 percent.
"We've surpassed all expectations," Prime Minister Pedro Passos Coelho told parliament after the figures were released.
In the fourth quarter, GDP rose 1.6 percent from year earlier compared with a revised contraction of 0.9 percent in the third quarter.
Filipe Garcia, head of Informacao de Mercados Financeiros consultancy, said the data showed private consumption was recovering.
"This is the third quarter with positive quarterly growth, which hasn't happened since the third quarter of 2010," said Garcia. "In year-on-year terms this is also the higher growth rate since the third quarter of 2010."
The government has forecast that the economy should post positive growth this year of 0.8 percent although some economists say it could be higher than that.
(Reporting by Axel Bugge, Sergio Goncalves and Filipa Cunha-Lima; Editing by John Stonestreet)