The Government confirms a 0.7% deficit in 2018. It sees a 0.7% surplus in 2020

This Friday, the Government handed in Parliament the 2018-2022 Stability Programme. The document has a more optimistic vision about the upcoming year’s economy. The Portuguese Executive estimates that the deficit will retrieve to 0.7% of GDP in 2018. In 2020, public accounts are actually positive: there will be a 0.7% surplus.

The plan details the Government’s macroeconomic forecasts for the upcoming four and a half years, as well as the goals the Government is committing towards Brussels. And it is expected that Portugal will present a positive evolution during this four and a half-year period.

The economy will continue growing at a good pace, always above the 2% threshold. Simultaneously, the structural balance, which should stand at 0.7% of GDP this year, will become a surplus from 2020 onward — before that, in 2019, when parliamentary elections will take place, the deficit should stand at 0.2%.

Overall balance

As for the commitments towards Brussels, the Government states in the document that “the Stability Programme complies with the goals for reducing the structural deficit and public debt that Portugal took on and conveyed to its European partners”.

Economy is growing, unemployment and debt are decreasing

Economic pace will be very important for fiscal performance. And the Government anticipates some stability in the growth rhythm for the time established in the Stability Programme: wealth produced in the country will always grow at rates higher than 2%. Until 2020, Portuguese GDP should register a 2.3% growth per year. It will slightly decelerate to 2.2% in 2021 and 2.1% in 2022.

Gross Domestic Product

An improvement in economic activity should have repercussions on the labor market. This year will end with a 7.6% unemployment rate, which will progressively decrease to 6.3% in 2022.

Unemployment rate

As for public debt, the downward tendency will continue. Having a 122.2% of GDP public debt to start of with in 2018, Portugal will get to 2020 with a plunge of over 20 percentage points.

Public debt