Economist Intelligence Unit predicts slow economic recovery for Portugal
The Economist Intelligence Unit points out that Portugal's recovery in 2021 is likely to be slow, but the country is at low risk of falling back into a banking crisis.
The Economist Intelligence Unit (EIU) says Portugal’s recovery for next year is likely to be slow, but that the country is at reduced risk of falling back into a banking crisis due to the European Central Bank’s (ECB) protection and support from the European Union, according to Diário de Notícias.
“Portugal is being affected by a sharp economic recession and its public finances are deteriorating rapidly. However, the ECB’s support is keeping funding costs to an all-time low,” say the unit’s economists.
The EIU recalls that the current health crisis will “lead to a substantial contraction of real Gross Domestic Product (GDP) of at least 8% in 2020,” and that next year the Portuguese economy will feel the “lasting impact of the coronavirus on tourism, a negative risk that will prevent a rapid recovery.” However, they say that “European policy measures will limit the risk of a banking or sovereign crisis.” The government anticipates an 8.5% drop in the economy this year, and the Bank of Portugal 8.1%.
