Bank of Portugal sees GDP growing by 4.8% in 2021
The national economy will grow close to 5%, says the Bank of Portugal (BoP). The labour market will also improve slightly.
The Bank of Portugal (BdP) is more optimistic about the recovery of the post-pandemic Portuguese economy. Rather than 3.9% growth this year, the central bank now sees the country’s GDP growing by 4.8%.
“The growth of the Portuguese economy over the 2021-2023 period is revised upwards and unemployment downwards compared to the March forecast,” the Bank of Portugal said in its June Economic Bulletin, released on Wednesday, anticipating that the Portuguese economy will recover the level of 2019 in the first half of 2022.
The central bank explains that “the profile of economic growth reflects a faster than expected reaction to the lifting of restrictions from last March,” which is also reflected in the evolution of investment and external demand.
In 2022, according to Bank of Portugal forecasts, the economy will grow by 5.6%, which is above the 5.2% estimated previously. In 2023, growth slows to 2.4%.
However, for this growth to take place, the planned level of investment must be achieved, with an average growth of 7% between 2021 and 2023. “The business component should grow by 6.4% on average annually, supported by favourable financial conditions, European funds, the recovery in demand and the gradual reduction in uncertainty,” explains the economic bulletin, adding that “public investment shows higher growth, about 20% on average, reflecting the implementation of the Recovery and Resilience Plan, which represents about 30% of planned public investment in 2022-23.”
Regarding the labour market, employment will increase by 1% in average annual terms over these three years, leading to a drop in the country’s unemployment rate to 6.8% in 2023. Before that, it will rise to 7.2% in 2021. The central bank economists maintain their forecast that the real disposable income of the Portuguese (as a whole) will not suffer a fall: between 2021 and 2023, it will increase by 1.3% on average, “as a result of the recovery in employment and wages,” after already having increased in 2020, despite the pandemic crisis.