EU sees the Portuguese economy growing 0.7% in 2023

The European Commission revised Friday its forecast for Portugal’s GDP growth to 6.6% in 2022 but cut its estimate for 2023 by more than half to 0.7%, the autumn macroeconomic forecast showed. In addition, the forecast for next year is more pessimistic than that of the Portuguese government.

For 2024, the Commission’s projections show a recovery of the Portuguese economy, with a 1.7% GDP growth rate.

The latest EU forecasts from July predicted a growth of 6.5% in 2022 and 1.9% in 2023. This year’s developments gave the confidence to raise the estimated figure for 2022, which is higher than the government’s estimate (6.5%). But next year’s projections are well below the scenario in the State Budget for 2023 (OE2023). The government’s forecast point to a growth of 6.5% this year and 1.3% next year.

The EU also sees public debt standing at 115.9% in 2022 and 109.1% next year. Figures are almost in line with those estimated in the State Budget for 2023 (115% in 2022 and 110.8% in 2023). The downward trajectory continues in 2024 to 105.3%, the EU executive projects.

As regards budget balances, the Commission’s forecast is for a deficit of 1.9% this year, the same as the government’s, but is more pessimistic for the year: it predicts that the deficit will only fall to 1.1%, whereas the State Budget projection is for a 0.9% deficit.

Brussels also estimates that the unemployment rate in Portugal will be 5.9% in both 2022 and 2023, higher than the Portuguese government’s forecast of 5.6%. For 2024, the Commission expects a drop in unemployment to 5.7%.

As for inflation, it sees a rate of 8% in 2022 and 5.8% in 2023, both higher than the government’s estimate. The Executive had estimated a 7.4% in 2022 and 4% in 2023.