Portugal Economic Forecast

Portugal Economic Outlook

October 27, 2020

The economy should have recovered somewhat in Q3, although the fallout from the pandemic continued to weigh on activity. Available data shows that industrial production returned to growth in August after declining in July. Moreover, in July–August retail sales shrank at a softer pace than in Q2. However, tourism revenues were still down severely in the same two-month period. Turning to Q4, a surge in cases and implementation of some new restrictions in mid-October bodes ill for activity. In other news, on 12 October the government submitted the draft 2021 budget to parliament. The plan sees a reduction in expenditure to 47.8% of GDP (2020: 49.9%), due to a reduced need for fiscal support as the economy rebounds. The budget aims to strike a balance between supporting the recovery—the government will boost investment and subsidies for lower-income workers—and containing the fiscal deficit.

Portugal Economic Growth

The economy is seen rebounding next year, as the effects of the pandemic dissipate, providing room for the return of demand through recovering tourism and household consumption. Investment should also recover on decreasing uncertainty. Delays in implementing a vaccine and a possible prolonged health crisis pose downside risks to the outlook. FocusEconomics Consensus Forecast panelists see GDP growing 5.5% in 2021, which is down 0.1 percentage points from previous forecasts. For 2022, the panel sees it climbing 3.4%.

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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