Portugal is the EU country with the highest growth rate in 2022, and the only one with a figure above 6%. For 2023, the country ends up falling in the chart, recording the 15th highest growth.
The European Commission has updated its forecast for Portugal’s gross domestic product (GDP) growth in 2022, from 5.8% to 6.5%. However, growth projections for 2023 fell from 2.7% to 1.9%, according to the EU executive’s summer economic forecast.
In the updated forecast, Portugal is the EU country with the highest growth rate in 2022, and the only one with a figure above 6%. For 2023, the country ends up falling in the chart, recording the 15th highest growth.
Tourism will be a major driver for growth this year. “After a strong start of the year, Portugal’s growth is expected to moderate in quarterly terms but to remain significant in annualised terms in 2022,” the Commission said in its summer Economic forecast document. The projections indicate that exports of services will contribute most to growth, reflecting a expansion of 75% year-on-year in the first quarter of the year, which “was clearly supported by the recovery of the tourism sector.”
The momentum from tourism is expected to continue as “the latest data suggest a continued strong performance in tourism with international flights and foreign tourist visits nearly reaching their pre-pandemic level in the second quarter of 2022.”
On the other hand, “short-term indicators suggest a slowdown in private consumption, industrial output and construction amid rising cost pressures from energy prices and global supply constraints,” the Commission admits, also adding that “weaker demand from trading partners is also projected to weigh negatively on exports of goods.”
Brussels also released projections for inflation, which have been revised slightly upwards for the next two years. For Portugal, it forecasts an inflation of 6.8% in 2022 and 3.6% in 2023, up from 4.4% and 1.9% previously estimated.
For the European Union, the Commission predictions point to a GDP growth of 2.7% in 2022, unchanged from the Spring Economic Forecast, and 1.5% in 2023, revised downwards. In May, Brussels had already reduced growth forecasts for the 19 euro area countries to 2.7% this year, (in February the forecast was 4.0%), and to 2.3% in 2023, (previously 2.7%), in the first assessment of the impact of the war in Ukraine on the bloc’s economy.