The European Commission's forecasts for the Portuguese economy are far more pessimistic than those of Portugal's government, which point to a fall of only 6.9%. Brussels forecasts a 9.8% contraction.
The European Commission estimates a 9.8% drop in Portugal’s GDP this year in the Summer 2020 Economic Forecast, released this Tuesday. This was the biggest downward revision among member states, compared to the spring projections released in May, when Brussels pointed to a 6.8% contraction in 2020.
This projection, which was lowered by three percentage points, is more pessimistic than the government’s, which points to a drop of 6.9%. For 2021, the European Commission foresees that the Portuguese economy will recover 6% next year, this figure was revised upwards, while in May growth was estimated at 5.8%.
As for the forecasts for the second quarter of the year, it is estimated that economic performance has fallen “at a much steeper rate” of around 14% (quarter-on-quarter), “reflecting dramatic contractions in most economic indicators”, points out the Commission, signalling that tourism was the most affected sector.
Lack of foreign tourism penalizes the country
“With the confinement starting to ease in May, economic activity is slowly picking up but for many businesses, such as airlines and hotels, it is expected to remain well below its pre-pandemic level over a longer period,” the European Commission stresses in the report.
Brussels also points out in the specific segment on Portugal that the risks “are still tilted to the downside due to the large impact of foreign tourism, where the uncertainties over the medium term remain significant.”