Bank of Portugal pours cold water on government’s growth forecasts
In a matter of three months, Portugal’s economic perspective has become “a great deal more pessimistic”.
This is the opening sentence today of Correio da Manhã’s take on the various announcements on Friday by Mário Centeno, governor of the country’s central bank, Bank of Portugal.
Adding to the general noise is the reaction by CHEGA, whose leader believes Centeno delayed his bombshell until after the elections ‘to help the government’ (see below).
First to the nitty gritty: “The Bank of Portugal has revealed that the economy should only grow by 1.6% this year – a long way from the 2.3% which it forecast in March. The figure is also well below the government’s estimate of 2.4%, which was sent to Brussels”, says CM.
The central bank gives no immediate reason for the ‘contraction of activity’ but it may be the combination of political upheavals – now thankfully ‘sorted’ following the May 18 elections – and global economic uncertainty prompted by the arrival in the White House of President Trump, and his roller-coaster of executive orders.
As the Bank warns, “the result could be even worse than currently predicted if commercial tensions increase, if economic uncertainty persists and in the case of difficulties in executing EU funds”.
Mr Centeno – ostensibly hoping to see his mandate at the central bank extended for a second term – also warned of the return to a deficit, this year (something the government stressed was absolutely not going to happen…), increasing next year along with a corresponding risk of failure to comply with European budgetary rules.
In other words, the former Socialist finance minister placed as central bank regulator by the last Socialist government has essentially said that everything the government said would not happen (during the election campaign) is, in his institution’s perspective, highly likely.
Quizzed as to whether he was concerned about the announcements, prime minister Luís Montenegro responded “No. What I am concerned about is looking at every Portuguese citizen every day and improving his/ her quality of life”.
The PM (along with president Marcelo) has previously poo-pooed Mário Centeno’s forecasts, saying he was the only one delivering them.
But CHEGA leader André Ventura is not taking this latest crinkle in the ointment lightly. His reading of the situation is that Mário Centeno delayed publication of these pessimistic economic forecasts to favour the government during last month’s elections.
“We ran the campaign, the proposals and the debates based on a growth model that was not real, and based on economic forecasts that were not real. If this is not a crutch for the system, then I don’t know what is. The Bank of Portugal must be an independent institution, financial institutions must be independent”, he told journalists, suggesting the country’s central bank ‘did the government a favour’ by ‘hiding the reality (of the economic situation) from the Portuguese people, and is thus complicit in a ‘fraud’.
Alluding to embedded connivance between the parties of PS Socialists and PS social, Ventura said his party will be calling Mr Centeno to parliament to “give an explanation as to why the numbers changed and what happened that led to a drastic change in these numbers”.
André Ventura stressed that his party will also “question the Government about the numbers it has, because no one agrees” on the economic predictions “for next year”.
“We will question the Minister of Finance about the real values of the government’s growth forecast for next year, because no policy can be implemented without having coherent and serious figures on economic growth. The country needs to grow economically,” he insisted. ND
