Portugal Economic Forecast

Portugal Economic Outlook

May 31, 2022

After Q1’s surprisingly positive GDP figures, growth appears to be normalizing in Q2. In April, consumer sentiment remained quite downbeat due to the war in Ukraine, while inflation continued to spike, which is likely to weigh on consumer spending. On the other hand, business confidence ticked up in April, while the tourism sector performed robustly during the same month. The stronger-than-expected recovery, coupled with a degree of public spending restraint, led Fitch Ratings to revise the country’s outlook from stable to positive in early May, while the finance minister vowed to reduce the public debt at a faster pace to help ensure financial stability. The European Commission recently drew attention to upward pressure on public spending stemming from the country’s sizeable public sector wage bill, while the IMF has called for measures to bolster pension sustainability.

Portugal Economic Growth

The GDP growth estimate for 2022 was revised significantly upwards this edition, as panelists factored in an unexpectedly strong performance during Q1. Growth will be fueled by a recovery in tourism, robust household spending amid a solid labor market and EU fund inflows. However, the prolongation of supply chain disruptions and the war in Ukraine pose downside risks. FocusEconomics Consensus Forecast panelists see GDP growing 5.3% in 2022, which is up 0.7 percentage points from the previous month’s forecast. For 2023, the panel sees GDP climbing 2.3%.

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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