Portuguese GDP to be 0.7% above pre-pandemic level in 2022

The Portuguese economy will end 2022 with a level of activity 0.7% above that recorded before the pandemic. Despite the war, which led the government to revise economic growth downwards to 4.9% this year, Portugal’s GDP should be able to complete the recovery, in which it is already lagging behind most European countries. Even if they recover, tourism exports will still be well below their pre-pandemic level.

The figures are included in the State Budget proposal for 2022 (OE2022) and show that the new Executive remains confident that it will be possible to complete the post-pandemic recovery, despite the economic impact of the Russian invasion in Ukraine. This is even with the cut in the GDP forecast in 2022 from 5% in the Stability Programme 2022-2026 (5.5% in the original OE2022) to 4.9%, in line with the Bank of Portugal’s figure.

“For the year 2022, the Portuguese economy is still expected to continue on a recovery path, with growth of 4.9%, with the economy expected to be 0.7% above the pre-pandemic level recorded in 2019,” the Finance Ministry now led by Fernando Medina anticipates in the Budget report. The 0.7% represents a downward revision of one-tenth from the 0.8% indicated in the Stability Programme released at the end of March.

GDP’s downward revision is explained “mainly due to its effects on prices and traded quantities of raw materials (energy, cereals among others), as well as the widely implemented economic sanctions,” explains the State Budget report for 202022. But there are more pessimistic forecasts such as BPI’s, which estimates a growth rate of only 4.2%, which would postpone the full recovery until 2023.