The Bank of Portugal slightly improved GDP growth forecasts this year to 6.8%, but worsened it to 1.5% for 2023, and is more pessimistic about inflation, forecasting 8.1% this year and 5, 8% % in 2023.
In today’s December Economic Bulletin, the institution led by Mário Centeno forecasts 6.8% gross domestic product (GDP) growth this year, compared to 6.7% in October and 6.3% in June.
The forecast is close to the government’s as the executive estimates GDP growth of 6.5% this year in the state budget for 2023, but the prime minister said he believes it will be 6.7%.
However, the banking regulator is more pessimistic about 2023 compared to June and forecasts growth of 1.5%, where it was previously estimated at 2.6%.
The forecast is slightly more optimistic than that of the CEO, who predicts growth of 1.3%.
In terms of inflation, the banking regulator has again worsened estimates and forecasts a rate of 8.1% this year and 5.8% in 2023, while in June it predicted 5.9% in 2022 and 2.7% in 2023 (in October he already estimated a rate of 7.8% for this year).
The Bank of Portugal (BdP) is therefore more pessimistic than the executive, which forecasts that the Harmonized Index of Consumer Prices will reach 7.4% this year and 4% in 2023.
Despite the slowdown in economic growth in 2023 (although it predicts a recovery for 2024 and 2025), the BdP expects growth above the Eurozone.
For example, the regulator anticipates controlled growth in the first half of 2023, which will lead to a “moderation in household spending” and “some delay in corporate investment plans and a slowdown in exports”, but an acceleration in activity in the second half of 2023. half of the year.
The BdP forecasts that private consumption will increase from 5.9% this year to 0.2% in 2023, while public consumption will increase by 2% this year and 1.9% next year.
GDP forecasts point to investment growth of 1.3% this year and 2.9% next year and domestic demand rising from 4.3% in 2022 to 0.9% in 2023.
He also estimates that export growth will slow from 17.7% this year to 4.3% next year, while that of imports will go from 11.1% in 2022 to 3% in 2023.
However, he cautions that uncertainty surrounding the projection is high, with downside risks to activity and upside risks to inflation.
“The main source of uncertainty stems from the development of the energy crisis in Europe, namely the possibility of gas shortages requiring a period of rationing and reductions in production, resulting in further increases in international prices for goods and services,” he explains, taking into account taking into account that this would lead to inflation staying high for longer.
In addition, he points out, “there is the possibility of stronger growth in corporate wages and profit margins, with secondary effects on prices”.
Source: DN
