Government cuts GDP growth to 4% in 2021

  • ECO News
  • 15 April 2021

The third wave of the Covid-19 pandemic has forced the government to revise downwards the growth forecast for Portugal this year.

The government sees Portugal’s GDP growing 4% this year, which represents a downward revision for 2021, due to the third wave of the Covid-19 pandemic. For 2022, the figure has been revised upwards, to 4.9%, due to the positive economic outlook, said João Leão, the country’s finance minister, at the presentation of the 2021/2025 Stability Programme.

In the forecasts included in the State Budget for 2021, the government led by António Costa estimated that the Portuguese GDP would grow by 5.4% in 2021 and 3.4% in the next year. However, because of the third wave, the government now predicts that “…in 2021 and 2022 together, the GDP will grow by 9%[:] 4% in 2021 and 4.9% in 2022,” the minister signalled.

Still, the Portuguese economy will “exceed the level of 2019 next year,” according to the minister. Growth “relies heavily on the recovery of exports and investment, private and public,” also benefiting from the effect of the Recovery and Resilience Plan (RRP), with European funds.

João Leão estimates the RRP will have an impact on the Portuguese economy of 22 billion euros over the next five years.

At last, the Portuguese minister also points out that the vaccination plan allows us to give “positive prospects” for the European economy, stressing that international entities have also “been reviewing growth upwards for the coming year.”

In the 2021-2025 Stability Programme, which will be delivered this Thursday in Parliament, the government also foresees a budget deficit below 3% of GDP in 2023.