Portugal Economic Forecast

Portugal Economic Outlook

August 27, 2019

The economy maintained a firm pace of expansion in the second quarter, as a stronger external sector countered weaker domestic demand. Fixed investment, however, likely lost traction in the quarter, reflected in part by reduced purchases of capital goods from overseas markets. Meanwhile, private consumption metrics were mixed: Imports of consumer goods fell, while consumer confidence climbed. Turning to Q3, consumer confidence rose to a nine-month high in July, while the economic climate index inched down in the same month. A faster-than-expected decline in the public debt load and ongoing improvements in the banking sector prompted Moody’s to upgrade the outlook on the country’s credit rating from stable to positive on 9 August. In other news, the government lifted all limits on fuel purchases on 19 August after fuel tanker drivers agreed to enter government-brokered talks with employers. This followed seven days of strikes and has abated fears that lengthy fuel shortages would restrain economic activity.

Portugal Economic Growth

Growth is set to slide this year, as imports pick up and drag on the external sector. Meanwhile, fixed investment is seen accelerating, thanks to the rollout of several delayed investment projects, which should sustain the pace of expansion in domestic demand. On the flip side, private consumption is expected to lose steam amid weaker consumer confidence. Downside risks to the outlook stem from a challenging external environment. FocusEconomics analysts expect growth of 1.7% in 2019, which is unchanged from last month’s forecast, and 1.6% in 2020.

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Portugal Facts

Bond Yield0.17-1.90 %Sep 04
Exchange Rate1.100.65 %Sep 04
Stock Market4,931-0.02 %Sep 04

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