Portugal Economic Forecast

Portugal Economic Outlook

September 1, 2020

A preliminary estimate revealed that the economy shrank at a record pace in the second quarter as the brunt of the Covid-19 pandemic and associated containment measures was felt. Although a detailed breakdown of components is not yet available, the downturn is expected to have been broad-based, with particularly household spending and investment tumbling due to lockdown measures and elevated uncertainty. In addition, exports are expected to have been hit by collapsing activity in trading partners and halted tourist arrivals. Turning to Q3, although consumer sentiment dropped in July, it strengthened somewhat in August. Meanwhile, the country is set to receive EUR 5.9 billion from the European Union’s SURE program to help support high unemployment costs due to the pandemic.

Portugal Economic Growth

The economy is seen contracting at the sharpest pace in decades this year. A sharp deterioration in the labor market will dent private consumption, while coronavirus fears and mobility restrictions hammer the vital tourism industry, which makes up around 15% of GDP. Uncertainty in the tourism sector and the possibility of further containment measures pose downside risks. FocusEconomics Consensus Forecast panelists see GDP plunging 8.9% in 2020, which is down 0.4 percentage points from last month’s forecast, before climbing 5.8% in 2021.

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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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