The Economist Intelligence Unit points out that Portugal's recovery in 2021 is likely to be slow, but the country is at low risk of falling back into a banking crisis.
The Economist Intelligence Unit (EIU) says Portugal’s recovery for next year is likely to be slow, but that the country is at reduced risk of falling back into a banking crisis due to the European Central Bank’s (ECB) protection and support from the European Union, according to Diário de Notícias.
“Portugal is being affected by a sharp economic recession and its public finances are deteriorating rapidly. However, the ECB’s support is keeping funding costs to an all-time low,” say the unit’s economists.
The EIU recalls that the current health crisis will “lead to a substantial contraction of real Gross Domestic Product (GDP) of at least 8% in 2020,” and that next year the Portuguese economy will feel the “lasting impact of the coronavirus on tourism, a negative risk that will prevent a rapid recovery.” However, they say that “European policy measures will limit the risk of a banking or sovereign crisis.” The government anticipates an 8.5% drop in the economy this year, and the Bank of Portugal 8.1%.