The International Monetary Fund (IMF) predicts that Portugal's GDP will grow by 5.1% next year, below the forecasts made by the government in the proposed State Budget for 2022 (OE2022).
One day after the government submitted the State Budget for 2022 (OE2022) with a growth forecast of 5.5%, the International Monetary Fund (IMF) updated its projections in the World Economic Outlook (WEO) on Tuesday and predicted that the Portuguese economy would grow by four-tenths less: 5.1% in 2022. This figure is in line with the forecasts of the European Commission (July) and the Public Finance Council (September).
Despite being below the Executive’s forecast, this growth is above the 3.9% estimated in April by the IMF. There is also good news for 2021: the IMF has revised growth upwards from 3.9% to 4.4%, which is close to the 4.8% estimated by the government in the proposed State Budget for 2022. At this rate of economic expansion, Portugal will reach the pre-Covid level early next year.
If Portugal grows 5.1%, according to IMF forecasts, it will be the fifth fastest-growing country in the Eurozone, only surpassed by Spain (6.4%), Malta (6%), Latvia (5.2%) and the Czech Republic (5.2%).
In the medium term, the IMF expects that the Portuguese economic growth will decelerate down to 1.8%.
On the labour market, Washington economists agree that there will be an improvement: the unemployment rate will rise from 7% in 2020 to 6.9% in 2021, falling again in 2022 to 6.7%. The government is slightly more optimistic, seeing the unemployment rate at 6.5% in 2022.
Regarding the inflation rate, the IMF sees it as being higher than what the government anticipates: it should be 1.2% in 2021 and 1.3% in 2022.
For the external accounts, the current balance will be negative: -1.7% of the GDP in 2021 and 2.1% of the GDP in 2022. Forecasts for the budget deficit and public debt will be released later with the Fiscal Monitor report.