The institution headed by Carlos Costa maintains the growth forecasts for 2018 and 2020, but leaves the door open for positive surprises in the short term.
The Bank of Portugal did not change its growth forecasts for the 2018 to 2020 GDP, but acknowledges that in the short term there might be positive surprises. This is good news for the Finance Ministry, which is already making new forecasts for the next couple of years.
The institution headed by Carlos Costa maintained the forecasts of a GDP growth rate of 2.3% this year, 1.9% in 2019 and 1.5% in 2020. The December Economic Bulletin pointed to the same numbers.
In spite of it, the report’s tone is optimistic. The bank believes the Portuguese economy is going through a good momentum, so it leaves an open door for a larger economic growth in the short term than what was projected. There are “high risks in the short term” due to “the possibility of a stronger cyclic impulse than what was anticipated”, the bank acknowledges in the document that follows the new macroeconomic projections.
That sentence — which showcases a reinforcement of BdP’s optimism — can be seen as a sort of comfort letter to the Government. The Finance Ministry is working on the Stability Programme it will send Brussels in April, when it will update new forecasts for the GDP growth rate. In addition, the bank’s current number for 2018 is already better than the Executive’s, which pointed to 2.2%.
The bank’s optimism is sustained in a set of factors, namely: the continuance of a favorable sentiment, the fact that the economic expansion was surprisingly positive and the ability the exporting sector has revealed to continue earning market quotas.