Portugal Economic Forecast

Portugal Economic Outlook

November 23, 2021

Following a healthy rebound in Q2, the economy lost steam in quarterly terms in Q3, but still recorded growth amid a swift inoculation campaign and stronger tourism activity. Although a full breakdown is not yet available, the release showed domestic demand strengthened, while the external sector contributed negatively to growth. Turning to Q4, higher energy costs, which have already been felt in producer prices, threaten to hamper momentum, with the daily economic indicator down from its Q3 average in October and the first half of November. In other news, the country was plunged into political crisis on 27 October, when the 2022 budget proposal was rejected by the legislative branch, thus triggering the president’s promise to dissolve parliament. The president’s official announcement came on 5 November, with elections scheduled for 30 January next year.

Portugal Economic Growth

GDP should return to its pre-pandemic levels in 2022, gaining momentum after a mild recovery in 2021. Incoming EU funds will likely reinforce capital spending, while an improving labor market should boost private consumption. However, political instability and the lack of a budget—necessary for the arrival of EU funds—threaten investment in the first half of the year. FocusEconomics Consensus Forecast panelists see GDP growing 4.9% in 2022, which is down 0.1 percentage points from the previous month’s forecast. For 2023, the panel sees GDP climbing 2.4%.

Portugal Economy Data

2015 2016 2017 2018 2019
Population (million)10.410.310.310.310.3
GDP per capita (EUR)17,35018,06019,02419,87520,684
GDP (EUR bn)180186196204212
Economic Growth (GDP, annual variation in %)1.82.03.52.62.2
Consumption (annual variation in %)1.92.62.12.92.3
Investment (annual variation in %)5.92.511.55.86.6
Exports (G&S, annual variation in %)6.34.48.44.53.7
Imports (G&S, annual variation in %)8.05.08.15.75.3
Industrial Production (annual variation in %)2.12.33.90.1-2.3
Retail Sales (annual variation in %)2.52.74.14.14.4
Unemployment Rate12.411.18.97.06.6
Fiscal Balance (% of GDP)-4.4-1.9-3.0-0.40.2
Public Debt (% of GDP)131132126122118
Money (annual variation in %)4.48.98.08.16.5
Inflation Rate (HICP, annual variation in %, eop)0.30.91.60.60.4
Inflation Rate (HICP, annual variation in %)0.50.61.61.20.3
Inflation (PPI, annual variation in %)-3.3-2.73.32.70.0
Policy Interest Rate (%)-  -  -  -  -  
Stock Market (annual variation in %)10.7-11.915.2-12.210.2
Exchange Rate (vs USD)-  -  -  -  -  
Exchange Rate (vs USD, aop)-  -  -  -  -  
Current Account (% of GDP)0.21.21.4-0.6-  
Current Account Balance (EUR bn)0.42.22.60.8-0.2
Trade Balance (EUR billion)-10.7-11.4-14.7-17.6-20.4

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Portugal Facts

Value Change Date
Bond Yield0.45-1.90 %Jan 01
Exchange Rate1.120.65 %Dec 31

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