IMF is more optimistic than Mário Centeno about the 2018 GDP

  • ECO News
  • 17 April 2018

The International Monetary Fund foresees the Portuguese economy will grow 2.4% in 2018. However, it anticipates a stronger deceleration in 2019.

It is already known that the economy will cool off, after having reached a maximum of 17 years in 2017. In the Stability Programme disclosed last Friday, Mário Centeno forecasts that GDP will decelerate to 2.3%. However, there is an even more optimistic institution: in the World Economic Outlook disclosed this Tuesday, the International Monetary Fund (IMF) anticipates that GDP will grow 2.4% in 2018.

In the 2018 State Budget, last October, the Finance minister hoped the economy would grow 2.2%. But the 2018-2022 Stability Programme made an upward revision of that number to 2.3%, although Mário Centeno emphasized several times that the Finance ministry is working in a “conservative” and “prudent” scenario. According to the International Monetary Fund, there are reasons to believe that the economy will not decelerate that much.

GDP forecasts for 2018 and 2019

Source: Portuguese Public Finance Council (CFP), February of 2018. European Commission (EC), February of 2018. Finance Ministry (FM), April of 2018. Bank of Portugal (BdP), March 2018. International Monetary Fund (IMF), April of 2018.

IMF experts forecast that the Portuguese economy will grow 2.4% this year, the most optimistic projection among the main national and international forecasts so far. That is the same forecast that the Fund makes for the Euro Area economic growth (2.4%), which would make Portugal converge to its European partners. Even so, Portugal will once again grow at a smaller pace than Spain (2.8%), its main economic partner.

The Fund’s optimism also includes the evolution of the labor market. IMF foresees the unemployment rate will decrease to 7.3%, a lower forecast than the 7.6% foreseen by the Government in the Stability Programme. If confirmed, the unemployment rate in Portugal would be lower than the Euro Area average.

For 2019, there is a different perspective. Mário Centeno is the only one that hopes for a stabilization of economic growth: the same is to say that GDP should also grow 2.3% in 2019. The remaining projections from institutions are all in sync: the economy will decelerate even more, leaving the 2% level. As for IMF, experts estimate a 1.8% GDP increase, below the Euro Area average (2%).