Caution powered by fears about rising prices due to Red Sea attacks
Today, for the third time in a row, the European Commission has revised downwards its outlook for growth in the eurozone economy. Portugal’s GDP has also been revised downwards, but above average for the eurozone and the European Union.
Portugal set to grow by 1.2% this year, and 1.8% in 2025
Brussels puts Portugal, among the countries of the single currency, with the second biggest slowdown in growth between 2023 and 2024 (1.1 percentage points), only surpassed by Malta (1.5 percentage points).
The commission expects Portugal’s GDP growth to fall from 2.3% in 2023 to 1.2% in 2024 and 1.8% in 2025, compared to its 1.3% growth forecast for this year, in its previous autumn forecasts.
The good news is that inflation continues to fall and could reach 2.3% this year, and 1.9% in 2025.
Regarding the eurozone as a whole, the EU executive cuts the growth outlook for this year, estimating that GDP will grow by 0.8% in the single currency area and 0.9% in the EU as a whole. This compares with its previous projections of 1.2% and 1.3% respectively, published last November.
For 2025, Brussels estimates that economic activity will grow by 1.5% in the eurozone and 1.7% in the EU, more of less in line with its autumn forecasts.
But it’s all about ‘ifs’ and ‘buts’. These forecasts come at a time of fears about rising prices in the single currency area and in the EU due to the attacks in the Red Sea, which have disrupted maritime transport and increased costs on trade routes between Asia and Europe.
In addition to the impact on supply chains, the conflict in the Middle East (if it continues for much longer, or, in worst case scenario, increases) could also affect energy prices, particularly oil.
In addition, there are currently blockades across Europe caused by protests by EU farmers, which could also affect the growth of the EU economy.
Source material: LUSA/ SIC Notícias
