Portugal Economic Forecast

Portugal Economic Outlook

June 2, 2020

The economy suffered its worst contraction in Q1 since records began in 1995, pummeled by the plunge in both domestic and external demand amid the widespread measures implemented to corral the spread of Covid-19. Although investment activity surprisingly rebounded after three consecutive quarters of decline, private consumption sank at an unprecedented rate. This, coupled with exports crumbling at the sharpest pace since the 2009 global financial crisis, took a drastic toll on activity. Turning to Q2, prospects are even more dire. In April, retail sales crashed at an unparalleled rate amid stay-at-home orders, while the key tourism sector was decimated as foreign travel came to a standstill. And although consumer sentiment improved in May, it remained well entrenched in pessimistic territory. More positively, the final stage of the economy’s reopening began on 1 June but with capacity limitations still in place.

Portugal Economic Growth

The economic downturn will be steep this year owing to the coronavirus shock. Given the economy’s reliance on the tourism industry, exports will crumble due to the collapse in travel. Household consumption will plunge amid a jump in unemployment, and investment will retreat due to lingering uncertainty. The marked deterioration in the fiscal position clouds the outlook. FocusEconomics analysts project GDP to contract 8.3% in 2020, which is down 0.6 percentage points from last month’s forecast, and grow 5.4% in 2021.

Portugal Economy Data

2015 2016 2017 2018 2019
Population (million)10.410.310.310.310.3
GDP per capita (EUR)17,35018,06019,02419,837-  
GDP (EUR bn)180186196204-  
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)  
Investment (annual variation in %)5.92.511.55.8-  
Exports (G&S, annual variation in %)  
Imports (G&S, annual variation in %)  
Industrial Production (annual variation in %)
Retail Sales (annual variation in %)
Unemployment Rate12.411.
Fiscal Balance (% of GDP)-4.4-1.9-3.0-0.4-  
Public Debt (% of GDP)131132126122-  
Money (annual variation in %)  
Inflation Rate (HICP, annual variation in %, eop)  
Inflation Rate (HICP, annual variation in %)
Inflation (PPI, annual variation in %)-3.3-
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)  
Current Account Balance (EUR bn)
Trade Balance (EUR billion)-10.7-11.2-14.6-17.6-20.4

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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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