‘No reason to be complacent about good results’ – Mário Centeno

  • Lusa
  • 11 October 2021

"There is no reason to be complacent about good results, but we should build on them," the governor of the Bank of Portugal said on Monday at the 'online' Financial Stability conference.

The governor of the Bank of Portugal (BoP), Mário Centeno, on Monday reiterated his confidence that the pandemic crisis would be overcome without permanent impacts, but said “there is no reason” to be complacent with good results.

“There is no reason to be complacent about good results, but we should build on them,” the governor said on Monday at the ‘online’ Financial Stability conference, recalling that the eurozone will come through the pandemic crisis with a “much higher” debt and still needing to recover employment and lower unemployment levels.

“A lot still has to materialise,” the former finance minister said.

“The projected trajectory before the pandemic is expected to be reached by the end of 2023, which is excellent news. If it materialises, it will be something that has never happened,” the governor also reiterated, recalling that the euro area recovered more than expected in the second quarter of 2021, expecting it to continue to grow rapidly, surpassing pre-pandemic values in the last quarter of the year.

During his speech, Mário Centeno mentioned that during the pandemic, the banking sector became more capitalised and robust, reacting with digital acceleration, with gains in its relationship with customers and internal remodelling that enabled banks to become “more efficient”.

“The more favourable context we are currently experiencing and the expected recovery of the economy cannot make banks stop their monitoring efforts. Credit institutions should continue with a conservative and prudent risk assessment,” Centeno warned, however.

The governor of the BoP also referred to climate change as “effective risks to financial stability”.

Last week, the Bank of Portugal maintained its economic growth outlook for 2021 at 4.8%, as it had done in the June Economic Bulletin.

According to the October Economic Bulletin, “the Portuguese economy will grow 4.8% in 2021, approaching the pre-pandemic level at the end of the year,” considering that “the recovery of activity reflects the control of the pandemic, through the vaccination process – with positive effects on the confidence of economic agents – and the maintenance of expansionary monetary policies.

According to the institution led by Mário Centeno, “in 2021, the Portuguese economy will continue the recovery process started in the third quarter of 2020,” considering that “the pandemic shock proved to be temporary, despite the more prolonged impact on some sectors and companies.

According to the BoP, Economic Bulletin published this Monday, “inflation stands at 0.9% in 2021,” an increase from the 0.7% projected in June.

The central bank’s economists anticipate that private consumption will grow 4.3% this year, increasing from the 3.3% projected in June.