The real growth of the Portuguese economy has been revised sharply downwards, especially this year and next, due to the impact of rising interest rates on households and businesses, while inflation is revised upwards but maintains a slowing trajectory over the next two years . a reflection of the aggressive policy of raising interest rates, shows the Bank of Portugal (BdP).
In the presentation of the new economic bulletin, BdP Governor Mário Centeno described “what remains of 2023 and the year 2024” as a year of “major slowdown” in growth, inflation and external demand, which only but should grow in the coming years. on average 2% (until 2025).
But he underlined that, even in the current inflationary environment and strong restraint, the economy must also be able to achieve “high retention” in terms of employment (“employment retention”) and investment (largely driven by public investments and European funds from the PRR and others), Centeno described.
According to the new economic bulletin (October), presented by the governor on Wednesday, “the Portuguese economy is expected to grow at a rate lower than the potential in the projection horizon”, which runs until 2025.
Real gross domestic product (GDP), i.e. excluding the effect of inflation, should rise by only 2.1% in 2023, 1.5% in 2024 and 2.1% in 2025, says the BdP. About three months ago the Bank forecast 2.7%, 2.4% and 2.3% respectively.
Still, the forecast value of 2.1% for this year remains better than the 1.8% estimated by the Ministry of Finance in April.
The Prime Minister, António Costa, has already revealed that the government, supported by less unfavorable economic performance than initially expected, will implement a more vigorous consolidation of public accounts and achieve a budget surplus, despite the serious inflation crisis that is having major consequences for families and businesses .
The BdP adds that in its new scenario “inflation should continue to decline, with annual variations in the Harmonized Consumer Price Index (HICP) expected to reach 5.4% in 2023, 3.6% in 2024 and 2.1 % by 2025”. In light of the projections in the June economic bulletin, inflation is revised upwards (0.2 percentage point in 2023 and 0.3 percentage point in 2024).
(being updated)
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Source: DN
