Portugal’s government foresees a 6.9% drop in GDP

  • ECO News
  • 5 June 2020

António Costa revealed that the government is working on a macroeconomic scenario with a 6.9% drop in GDP in 2020 and an unemployment rate of 9.6%.

The government is forecasting a 6.9% contraction of the economy in 2020 and an unemployment rate of 9.6%, compared to 6.2% before the pandemic crisis. The figures were released Thursday by the Prime Minister at a press conference presenting the Economic and Social Stabilisation Programme (PEES).

“Regarding the macroeconomic scenario (…) it is based on the figures that the Minister of Finance recently showed with a very significant drop in GDP of 6.9% and an increase in the unemployment rate to 9.6%,” revealed António Costa, noting that these are among the indicators “particularly important” for the country.

These should be the basic figures for the supplementary budget which will be presented by Mario Centeno next Tuesday and will give details of the measures in the PEES. António Costa hopes that this document will be adopted unanimously in Parliament.

The state budget for 2020, which came into force on April 1, had very different macroeconomic scenarios: a 1.9% growth in GDP, an unemployment rate of 6.1%, a budget surplus of 0.2% and public debt at 116.2% of GDP.

However, the pandemic crisis has radically changed the economic situation in the country. All forecasts point to significant falls in GDP and increases in the unemployment rate, albeit to different degrees depending on the assumptions made, especially given the uncertainty that still persists.

Two days ago the Public Finance Council released its projections: the entity led by Nazaré Costa Cabral sees GDP falling between 7.5% and 11.8% and the deficit-increasing to between 6.5% and 9.3%, depending on whether we are talking about the baseline or the severe scenario. The unemployment rate will vary between 11% and 13.1% and the public debt between 133.1% and 141.8% of GDP.