Portugal’s economy contracted more than expected in 2020. GDP fell by 8.4%

  • ECO News
  • 23 September 2021

Instead of the 7.6% initially estimated, the Portuguese economy contracted by 8.4%, Statistics Portugal (INE) revealed this Thursday.

The Portuguese economy contracted more than expected in 2020. The country’s GDP fell by 8.4%, instead of the 7.6% previously forecast by Statistics Portugal (INE). This is a difference of eight decimals that has repercussions on the public debt ratio, which rose to 135.2% of GDP.

“These results present the final version of 2019 and the provisional version of 2020 of the National accounts, and reflect an upward revision of the GDP in 2019, of 0.2% in value and volume, and a downward revision in 2020, of -1.3% in value and -0.8% in volume,” INE explained in a statement made public this Thursday.

“The 2020 revision was mainly determined by the more significant contraction of accommodation and catering and transport and storage activities,” It added.

The country’s statistics office also updated the public accounts data as a result of this upward revision of the GDP decline. INE now estimates that the budget deficit was 5.8%, one-tenth more than previously forecast. The greater fall in the economy has a more significant impact on the public debt ratio, which rises from 133.6% of GDP to 135.2% in 2020.

Thus, for both GDP and public debt, this means that the government has a long road ahead to return to pre-pandemic levels. These revisions could also impact the macroeconomic scenario of the State Budget for 2022 (OE 2022).

It should also be noted that GDP growth in 2019 has been revised upwards by two tenths to 2.7%.