The Forum for Competitiveness expects the Portuguese GDP to grow between 1% and 3% in 2021. However, the forecast's figures are lower than the 4% expected by the government in the Stability Programme.
The Forum for Competitiveness sees the Portuguese economy growing between 1% and 3% this year, which means a forecast lower than the 4% expected by António Costa’s government in the Stability Programme.
“For the year as a whole, uncertainty about tourism remains one of the main obstacles, in addition to the shyness of budget aid, the delay in funds from the European ‘bazooka’ and the uncertainty of the labour market. Thus, the Forum for Competitiveness expects growth of between 1% and 3%, even then a drop of between 5% and 7% compared to 2019 GDP,” said the Forum for Competitiveness in April’s information note released this Monday.
Still, the Forum notes that Q1 data shows that “the lockdown had much heavier costs than anticipated.” GDP fell by 3.3% quarter-on-quarter, falling far short of the impact of the 2020 Q2 lockdown, but above several forecasts. “If we compare with the GDP of the first quarter of 2019, we see that the fall is 7.5%, an identical figure to that seen for the recession of 2020,” the Forum explains.
For the second quarter, the expectation is for recovery because “there seems to be no reason to fear a new lockdown, at least not with the severity of the last one.” However, “there is also the uncertainty of bankruptcies and postponed unemployment,” recalls the Forum for Competitiveness, criticising public support for being “clearly insufficient”. But, “even if they were not, there would always be companies unable to survive this crisis,” it admits, foreseeing that “in the coming quarters there will be a clarification about the resulting destruction of productive capacity and employment, constituting a brake on recovery.”
Anyway, there is good news for the future, such as the case of the industry. “April’s confidence indicators were promising, especially for the industry, already returning to values similar to those before the health crisis, which suggests that this sector believes we are on the verge of a return to productive normality,” the note points out. However, the tourism sector remains very conditioned, so the Forum recommends setting an ambitious goal of having “120% of the EU vaccination average” in Portugal to attract more tourists for safety.
In relation to the labour market, the Forum recognises that the unemployment rate is “below most estimates for the year,” but argues that this suggests that “there is still delayed unemployment, which should be revealed over the coming quarters.”