IMF predicts 10% drop in Portugal’s GDP in 2020, recovery of 6.5% in 2021

  • Lusa
  • 13 October 2020

According to the report released today by the IMF, the forecasts made in April for Portugal, which predicted a drop of 8.0% of GDP in 2020, are two percentage points worse.

The International Monetary Fund (IMF) on Tuesday predicted a 10% fall in Portugal’s Gross Domestic Product (GDP) in 2020, and a 6.5% recovery to 2021, according to the World Economic Forecasts released today.

According to the IMF’s document, the forecasts made in April for Portugal, which predicted a fall of 8.0% in GDP in 2020, worsened by two percentage points.

However, compared to 2021, the institution led by Kristalina Georgieva improved the outlook for GDP growth from the estimated 5.0% in April by 1.5 percentage points.

In the figures released today, the IMF also pointed out that the unemployment rate in Portugal is expected to reach 8.1% in 2020 and to fall to 7.7% next year.

Inflation is expected to be zero (0.0%) in 2020 and 1.1% in 2021, in line with the economic recovery forecast by the IMF for Portugal next year.

In 2019, the national economy grew 2.2%, inflation was 0.3% and the unemployment rate stood at 6.5%.

The current account balance, which stood at 0.1% of GDP in 2019, will fall to -3.1% in 2020 and 3.5% in 2021, according to estimates by the Washington-based institution.

The IMF’s figures differ from those released on Monday by the Portuguese government under the proposed 2021 budget, as the government expects the economy to fall by 8.5% this year and recover by 5.4% in 2021.

The Banco de Portugal released its forecasts for the Portuguese economy last week, estimating a fall of 8.0% in GDP in 2020, improving on its previous forecast of 9.5%.

The European Commission forecasts the Portuguese economy to fall by 9.8% in 2020, a contraction above its previous projection of 6.8%.

Brussels estimates a growth of 6% for 2021, up from 5.8% in its previous forecast.