The resilience of the Portuguese economy to the macroeconomic context is increasingly questioned, given the comments of economists consulted by Dinheiro Vivo on the summer interim forecasts released yesterday by the European Commission.
According to António Mendonça, president of the Order of Economists, the new Brussels forecast “is in line with the data revealed on the economic performance of various countries. [do espaço comunitário]the evolution of domestic demand and international trade”. However, the economist emphasizes the scenario outlined for Germany.
According to the community council, the German economy is expected to shrink by 0.4% in 2023, with the gross domestic product (GDP) for 2024 revised downwards from 1.4% to 1.1%. Inflation for this year has been revised upwards, rising from 6.3% to 6.8%, which is expected to drop to 1.1% in 2024. It is a “strong cooling,” which for Mendonça translates into “ practically stagnation”.
“It is clear that this situation makes it more difficult to maintain the Portuguese economy, despite the good performance of tourism. It is not enough for everything,” said the economist, who is also a professor at the ISEG in Lisbon.
And what weight will this data have at Wednesday’s European Central Bank (ECB) meeting, given that the organization’s president, Christine Lagarde, has already conceded a further rate hike in September? António Mendonça did not dare to claim that the European Commission data “will be sufficient to change the perspectives published on the increase, even if reduced, in interest rates”, in a context of slowing inflation.
However, the economist hopes that “common sense will prevail and the rise in interest rates will stop, risking causing a recession in Europe that could be fueled by war. [na Ucrânia] and global geopolitical conflicts.” “To use Lagarde’s own words, it is necessary to be flexible, humble and recognize when it is time for change,” he said.
In the US, the predictions are said to be “very relevant”.
João Duque, professor and president of ISEG, explained that Brussels’ summer interim forecast “reflects the result of tight monetary policy with a stronger and longer-lasting effect than initially forecast.”
The lower expected growth for 2023 is explained on the one hand ‘because consumption and investments are more strongly influenced by increases [das taxas de juro] On the other hand, according to João Duque, because “it is clear that inflation is more resilient than expected and therefore extends the period of high interest rates”.
However, according to the president of ISEG, the forecasts revealed yesterday should not be strong enough to reverse the ECB’s position. “In Europe, the ECB does not have economic development as its mission. Therefore, theoretically, this information will not have a major impact, especially since there is still some room before we reach a recession,” said João Duque.
‘In the US this information would be very relevant because the Fed [sigla para Reserva Federal dos Estados Unidos] Its mission is to control inflation and economic development.”
“The decision [de subir ou não os juros] will be taken by the ECB, but we estimate, based on the short-term interest rate projections, that we are close to the peak,” European Economy Commissioner Paolo Gentiloni said at the conference that took place after the ECB’s appearance. interim summer forecast from the European Commission.
Brussels has adjusted the growth of the eurozone and EU economies downwards to 0.8% in 2023 and to 1.4% (and to 1.3% in the EU) the following year. The inflation forecast in the eurozone was also revised, to 5.6% this year and 2.9% in 2024. For the EU, inflation is forecast of 6.5% this year and 3.2% in 2024.
Source: DN
