The IMF sees the Portuguese economy growing 3.9% in 2021. The unemployment rate is expected to increase to 7.7%.
With the spring meetings comes another World Economic Outlook from the International Monetary Fund (IMF) in which forecasts for the world economy were improved, compared to the one released in January. However, for Portugal, the last forecast was from October 2020 (6.5%), and was already well out of date. The new forecast sees the country’s economy growing 3.9% in 2021.
This downward revision is explained by what has happened in Portugal since then. On the one hand, GDP did not fall as much as expected in 2020, which means that the variation in 2021 will not be as expressive; on the other hand, the second lockdown and the new Covid-19 strains have delayed the economic recovery, even with the vaccination process underway, conditioning the GDP’s growth.
However, despite the downward revision of GDP, the unemployment rate forecast remains at 7.7% in 2021. It should be said that the IMF does not explain its forecasts, but the better than expected performance of the labour market in 2020 should be responsible for these figures.
In its forecast for 2022, the IMF assumes invariant policies – it only takes into account the measures already legislated – and sees GDP growing 4.8%, reaching the pre-crisis level (2019). In the wake of this growth, the unemployment rate should slump to 7.3%.