Portugal Economic Forecast

Portugal Economic Outlook

November 20, 2018

A preliminary GDP estimate revealed that the economy lost pace in the third quarter. While a detailed breakdown of the result has yet to be released, the Statistical Institute indicated that a faster fall in exports compared to imports—largely driven by the widespread slowdown in the Eurozone—was likely behind the deterioration. On the flipside, domestic demand is expected to have been buoyant with retail sales growth in Q3 suggesting that private consumption grew at a solid, albeit more moderate, rate in the quarter. Leading indicators for Q4 point to more upbeat prospects: Although still in negative territory, consumer confidence climbed in October, which points to higher private spending. Meanwhile, business sentiment remained elevated in the month. In the first round of voting on 30 October, parliament approved the government’s 2019 draft budget, targeting the lowest deficit on record.

Portugal Economic Growth

Next year will likely see the economy expand at a healthy but weaker pace, owing to slowing domestic demand and a fall in export growth. Nevertheless, the thriving tourism sector should continue to support growth, while a tight labor market should keep private consumption growing at a solid pace, albeit dipping slightly from the previous year. Moreover, fixed investment growth is also expected to moderate amid less favorable financing conditions as the European Central Bank tightens its monetary policy stance. FocusEconomics panelists expect the economy to grow 1.9% in 2019, which is up 0.1 percentage points from last month’s forecast, and 1.6% in 2020.

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Portugal Facts

ValueChangeDate
Bond Yield1.73-1.90 %Dec 12
Exchange Rate1.140.65 %Dec 12
Stock Market4,843-0.02 %Dec 12

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