GDP forecast to grow 5% in 2022 taking Ukraine into account

The Stability Programme (PE) for the period 2022-2026 points to growth of 5% in 2022 and 3.3% next year, Finance Minister João Leão said on Friday.

“The results of 2021 create positive expectations for the next two years,” João Leão said at a press conference at the Ministry of Finance, where he detailed that this Friday the Stability Programme (PE) for 2022-2026 will be delivered to parliament.

In the PE’s macroeconomic scenario, he said, for 2022 and 2023 “the continuation of a strong post-pandemic economic recovery with growth forecast at 5% this year and 3.3% in 2023, benefiting from the post-covid recovery effect.

The PE also points to GDP growth of 2.6% in 2024 and 2025 and 2.5% in 2026, the last year of the horizon considered.

The 5% now considered for 2022 is a downward revision from the 5.5% that the government initially forecast for this year, and which it had already admitted it would review, taking into account the scenario posed by the war in Ukraine.

Questioned about the prospect of the economy entering recessionary territory, João Leão stressed that “the base scenario that is anticipated is not one of recession,” as “Portugal will continue to have a strong post-pandemic recovery.

“In the base scenario we have, GDP grows around 5%, it is in line with what the BdP [Bank of Portugal] presented yesterday [Thursday] (of 4.9%). In a more adverse scenario that we are anticipating here, there could be some quarters in which there would be some stagnation, but even so it would always be a scenario of strong recovery comparing 2022 with 2021,” said the finance minister who in the next government will be replaced by Fernando Medina.

This “significant growth dynamic” resulting from the recovery that has occurred “would ensure,” even if GDP stagnated at the figure for the fourth quarter of 2021, “a growth rate in 2022 of 3.6%,” he said.

“There is a significant growth dynamic here that happens even in a more adverse scenario,” he specified.