The Portuguese government has revised upwards its economic growth forecast for 2021, maintaining the target of 5.5% in 2022. This year's deficit will be smaller than initially projected.
The government sees GDP growing more this year, while the deficit should be smaller. The national economy is expected to grow 4.8% this year, above the 4.6% revealed by João Leão to the political parties, while maintaining the target of 5.5% in 2022. In the deficit’s case, the proposed State Budget points to a greater reduction, with the deficit falling to 4.3% of GDP this year, dropping once again to 3.2% in 2022, already very close to the 3% limit defined by European rules that remain suspended in 2022.
This macroeconomic scenario represents an improvement of the economic indicators in Portugal, but it is not without risks. The greatest risk to these forecasts is the possible appearance of a new strain of Covid-19 that may be resistant to the vaccines administered.
What is the driving force for growth next year, compared to 2021? The key is in exports of services and investment.
Exports of goods and services are expected to grow by 10.3% in 2022, up from 9.1% in 2021, with a greater contribution from exports of services due to tourism. Imports of goods and services will grow 8.2% in 2022, after increasing 9.4% in 2021. Private consumption will decelerate from a 5.2% growth to 4.7%, but the government expects investment to rise from 5.2% in 2021 to 8.1% in 2022.
With the public debt ratio, the Ministry of Finance expects a sharper reduction this year and the next, from 135.2% of GDP in 2020 to 126.9% of GDP in 2021 and the following year to 122.8% of GDP.
In the labour market, the unemployment rate should fall to 6.5% in 2022, after dropping from 7% in 2020 to 6.8% in 2021. Employment should grow by 1.8% this year and then by 0.8% in 2022.