Growth assured “if economy doesn’t suffer any external economic shocks”
In what has to be taken in the context of current extraordinary times, finance minister Joaquim Miranda Sarmento has said that he expects the Portuguese economy to grow by 2.5% this year “if it doesn’t suffer any external economic shocks”.
With the prospect of tariffs threatening a cold wind from the United States, and total uncertainty on the geopolitical landscape, the likelihood of external economic shocks has to be accepted.
That said, there is nothing like optimism at a dinner event – and this is where Miranda Sarmento was showing his ‘confidence’ in the way that things are going in this country.
“Economic growth since the pandemic has been one of the highest in the eurozone,” he told the Portuguese Studies Centre (CPE).
The latest estimate from INE National Statistics Institute points to a growth of 1.9% in Gross Domestic Product (GDP) in 2024, but Miranda Sarmento recalled that “the last quarter was exceptionally good”.
“Our official forecast is still 2.1%. However, with the growth we expected in October when we presented the budget in Parliament, and now with this “carry over” of 1.3% (of GDP), we will have 2.5% real growth (of GDP). That’s our expectation if no external economic shocks affect us,” he said.
Joaquim Miranda Sarmento was speaking as the guest of a group of mostly Portuguese members of the SPC, several of whom work in financial institutions, such as the chairman of the Legal & General insurance company, António Simões.
According to the minister, “results exceeded expectations in 2024”, as has been reported in the wider international press.
“Looking at the Portuguese economy, even if there is a recession next year, we will stay below the 3% (budget) deficit in terms of GDP,” he added (isn’t that suggesting there might just be an economic shock of some sort lurking somewhere?).
But on with the optimism: “Miranda Sarmento was pleased that the main rating agencies are currently assessing Portugal’s public debt positively, which has reduced interest rates on government bonds”, writes Lusa, recalling that this “contrasts with the “junk” rating, i.e. high risk, during the sovereign debt crisis for much of the 2010s”.
In fact, in January, ratings agency DBRS raised Portugal’s rating to “A” (high).
On Friday, it will be S&P’s turn to make a decision, followed by Fitch on March 14 and Moody’s on May 16.
“I wouldn’t be surprised if S&P also upgraded our rating on Friday,” said the minister, accepting that despite the “good news in this uncertain international environment”, Portugal continues to face “problems and difficulties”, mentioning, “among other issues”, says Lusa, “low productivity and the need to modernise public administration” – two areas that need a heck of a lot of input to see any kind of turnaround.
Source material: LUSA
