This Monday, the European Commission will present the spring macroeconomic bulletin, with more optimistic forecasts than the government for the growth of the Portuguese economy. Brussels predicts a growth of the Portuguese economy to 2.4% in 2023 and 1.8% in 2024.
The European Commission believes that the Portuguese economy is showing signs of a robust recovery, but nonetheless estimates that the growth rate recorded in the first quarter of this year will moderate in the second third of 2023 before recovering in the following months summer.
Grow
In the first quarter of 2023, the economy was driven by an increase in tourism, with “GDP growth estimated at 1.6% [no primeiro trimestre]sharply above the rates recorded in the previous three quarters”.
However, Brussels emphasizes that the economy is facing challenges, particularly due to the “weak internal demand”, in particular because “private consumption has been driven by the decline in household purchasing power in the previous quarters”, while “investors face higher interest rates “.
Economic growth is expected to moderate in the second quarter of 2023, but to “recover in the following quarters” as a result of the gradual recovery in household real disposable income and private consumption.
Inflation
According to the Spring Macroeconomic Bulletin, “nominal inflation should moderate”. Last year, Portugal spent the year with an inflation rate of 8.1%. Brussels estimates that this indicator will be set at 5.1% by the end of 2023 and will continue to slow down to 2.7% in 2024.
“The reduction was largely due to lower energy prices, while food prices remained high,” the document released by the European Commission said.
shortage
As far as public finances are concerned, Brussels makes a favorable forecast. After the deficit “falls to 0.4% of GDP in 2022”, it is expected to fall “to 0.1% of GDP in 2023”, maintaining the same forecast for 2024.
However, Brussels emphasizes that “tax revenues are the main driver of this growth, especially indirect taxes, which still reflect the maintenance of high prices”.
Energy
The document highlights that “the net budgetary cost of energy support measures” is estimated at 0.8% of GDP in 2023″, highlighting “the significant decrease” compared to the 2.0% of 2022.
Brussels expects energy support measures “to be completely abolished by 2024″admitted that “the 2023 deficit will also be impacted by the assumed total lifting of the temporary COVID-19 emergency measures, which in 2022 corresponded to 0.8% of GDP”.
Debt
The government debt-to-GDP ratio fell significantly to 113.9% in 2022, already below pre-pandemic levels. It is expected to continue a downward path to 106.2% in 2023 and 103.1% in 2024, driven by a “growth differential, favorable interest rates and improvements in the overall primary balance”.
Source: DN
