The finance minister insisted on Thursday, at the end of the Money Conference, hosted by Dinheiro Vivo, DN and TSF, that the interest rate hike by the ECB, which, despite all expectations, was “evolving in a faster and more intense process”. than was expected for this year and which, according to Fernando Medina, will also mark 2023.
Addressing bankers at the conference, the finance minister said they will all have to “go through the process of rate hikes, which can be seen as a process of normalizing monetary policy”. “The way we collectively deal with this challenge will largely determine the progress we have in 2023,” he concluded.
Also regarding next year, the finance minister warned that the country remains subject to an “external context” imposed on it: “We will face challenges for which we have no responsibility,” he said. The war in Ukraine, which has been going on since February 24, will continue to set the agenda and “total uncertainty will prevail over when and under what conditions the conflict will end”. It remains to “normalize energy prices” and to assume that their successive increases are of a structural nature, but to keep hope in the European movement towards energy autonomy.
The inflation scenario was not, nor was it able to materialize, with Fernando Medina confirming that “we will have high inflation that lasts for a longer period of time”, although the analyzes point to values ”lower than the current”. The same will happen with the rise in interest rates, a factor that is not surprising given that the ECB has already anticipated this.
In turn, we are entering 2023 “with internal forces to be valued,” the speech continued. “We tend to be pessimistic, but we wouldn’t be rigorous in the analysis if we didn’t put forward the forces that will drive 2023,” the minister stressed. They are the “decline of globalization”, which will allow the country to take advantage of investment opportunities; the “stability” achieved through consultative agreements, which “provide predictability and enable the state, employers and workers to orient themselves within an organized framework, in an uncertain context”; and the “resilience of tourism and services”, which has increasingly “has become international”.
In addition to citing a “less energy dependency”, Medina devoted herself to “pulling the gallons” and reiterated that the country will have “public accounts in order”, with a projected deficit in the region of 0.9%; a debt of 111%, accompanied by a primary balance of 1.6% of the Gross Domestic Product (GDP); and an acceleration of public investment.
The Seven Points of Medina Marking 2022
With regard to this year, Fernando Medina highlighted seven points that characterized him. Among these, “strong economic growth, which was by far the highest in the eurozone”; the “robustness of the labor market, which is close to what is the technical term of full employment”; the “deficit and debt reduction”, which will lead to a “platoon alongside countries like Spain, France and Belgium”; and “political stability”, due to a majority (of the PS).
Still on the subject, the minister stressed “the robustness and resilience of the Portuguese financial system”, recognizing the work done in recent years by the institutions, which have contributed to a Portugal that is today “solid, robust”. and that serves the economy and the Portuguese. For Medina, this is now “an asset that the country has” and that “we must know how to mobilize”.
The two less positive points were left at the end of the list. First, inflation, which turned out to be “higher and more persistent” than the European Central Bank (ECB) expected in the first half of the year. The finance minister explained that this is no longer a phenomenon solely related to the energy crisis and is expected to be “not temporary”. Within this issue arises the problem that countries, including Portugal, “transfer wealth to energy exporting countries”, leading to a “deterioration of the external balance”.
Source: DN
