But country as whole set to return to budgetary deficits
According to the Bank of Portugal (BdP) ‘s December Economic Bulletin, published today, the Portuguese economy will grow by 1.7% in 2024 and 2.2% in 2025, an upward revision from October’s projections.
Despite this upward revision – compared to the 1.6% and 2.1% estimated in the October Bulletin – the figure for this year is still below the State Budget estimate for 2024, which was growth of 1.8%, albeit it is above the 2.1% estimate for 2025.
The country’s central bank now estimates that the Portuguese economy will grow by 1.7% this year, 2.2% in 2025 and 2026, and 1.7% in 2027, “maintaining the convergence path with the euro area”.
This growth revision reflects “above all the greater fiscal expansion, associated with the inclusion of new tax measures and an increase in public spending, as well as the re-calendarisation of spending under the PRR”, says the institution.
“The greatest growth in activity is sustained above all by domestic demand,” explains the BdP, and “growth in 2024 is sustained above all by private consumption”.
In 2025 and 2026, economic growth “reflects the improvement in financial conditions and the acceleration of external demand, but also the expansionary and pro-cyclical orientation of fiscal policy”.
According to the central bank’s projections, inflation will fall to 2.6% in 2024 and 2.1% in 2025, stabilising at 2% in the following two years.
These projections will all be subject to geopolitical changes.
The institution has also predicted that Portugal will return to a budget deficit between 2025 and 2027.
The institution led by former socialist finance minister Mário Centeno sees a deficit of 0.1 % in 2025, 1% in 2026 and 0.9% in 2027.
For 2024, the projections point to a surplus of 0.6%, even higher than the 0.4% included in the State Budget.
Source: LUSA
