European Commission lowers Portuguese GDP forecast to 2,2%

European Commission forecasts “resilient growth amid increased uncertainty” for the EU. As for Portugal’s economic growth in 2018 and 2019, Brussels’ forecasts are a bit more pessimistic than expected by the portuguese government.

GDP growth will hit 2,2% in 2018 and 2% in 2019, according to the report, showing a 0,1% deviation from the previous forecasts that indicated Portuguese GDP’s growth to reach 2,3%. This is also lower than what the portguese government expects: 2,3%.

Brussels experts considered that although imports and exports are rapidly increasing in the country, in general terms they will have a smaller contribution to the economy due to the overall unfavorable external market conditions at present.

The EC also considered that job creation is going to slow down while oil prices will have a staggering impact on the purchasing power of the population.

Additionally, the Commission convened optimistically that Portugal’s financial system is showing several signs of improvement, adding that inflation is lowering gradually moving from a weight of 1,4% in 2018 to 1,6% in 2019. Alongside this, the EC duly noted that salaries have not been rising although it predicted they might start progressing soon.

The report shows that “nominal wage growth is expected to continue in 2018, albeit at a slower pace” and “real wage growth, however, is expected to moderate significantly in 2018, due to the higher inflation”, while on the other hand house prices have risen 12,2% “driven by tourism-related activities and foreign capital inflows”.