This year’s tax burden forecast by Finance Minister Fernando Medina will show the second-biggest cut ever in official series, according to data from the government itself, in the Stability Program to 2027 (PE 2023-2027), submitted Monday to Brussels and the Portuguese Parliament.
The biggest drop occurred in 2009, during the government of José Sócrates, but in a very different context to the current one: 14 years ago, the economy was in recession (it fell by more than 3% in real terms that year), despite the fact that inflation was negative. Unemployment exceeded 9% of the active population and was on track for historic highs, later reached under the troika and the PSD-CDS government.
In this depressed environment, 2009 was marked by significant erosion of economic activity, corporate turnover, household consumption and skyrocketing unemployment, leading to a sharp decline in tax and social security revenues, even more than gross domestic product. time, which is enough to explain the nearly 1.6 percentage point of GDP drop in that tax.
Not so now. Inflation is very high and interest rates are rising to try to cool down this inflamed environment. But a recession was looming, a scenario that the finance minister almost completely rejects.
“The risks of a recession in 2023 are ruled out”, taking into account the available indicators and the economy had a better start to the year than expected, is expected to grow by 0.6% in real terms in the first quarter compared to the previous three months of 2022, Fernando Medina said in parliament the day before yesterday.
The minister seems confident that this year’s growth will surprise in a positive way, after highlighting the impetus of “greater export growth” and “lower import growth”. He praised the strength of tourism, not to deviate.
And so he dismissed the shadow of a recession and said recovery is already underway this year. “The economy behaved much better than expected in the last quarter of 2022,” when quarterly (on-chain) growth was 0.3%, the National Statistics Institute (INE) said.
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Source: DN
