IMF cuts Portugal growth forecast, sees balanced budget
The IMF lowered Portugal’s 2026 growth forecast to 1.7% but now expects a balanced budget, a shift that matters for investors tracking the country’s fiscal and economic outlook.
The International Monetary Fund (IMF) has cut its 2026 growth forecast for Portugal to 1.7% from 1.9%, while improving its view of the country’s public finances and now expecting a broadly balanced budget this year, according to the IMF’s Article IV mission report. The update points to weaker economic momentum but a firmer fiscal position.
The IMF said Portugal’s economy should grow 1.7% this year and 1.6% next year. It said the downgrade reflects the negative impact of the war in the Middle East, only partly offset by European funds. The institution also noted the effect of a series of storms early in the year, although it said reconstruction should later support activity, leaving the overall impact neutral for 2026.
The new 1.7% forecast is below the Portuguese government’s 2% target. It is in line with the European Commission’s projection and close to the 1.8% expected by Banco de Portugal, the country’s central bank, and the OECD.
On prices, the IMF now expects inflation of 3.4% this year and 2.3% in 2027, compared with its previous forecasts of 3.1% for 2026 and 2.7% for 2027. On the budget, it said “the fiscal position is expected to be broadly balanced in 2026”, improving from its earlier projections for deficits of 0.1% and 0.2% of GDP in 2026 and 2027 respectively.
Originally published at Eco.pt
