Economy will bleed €15Bn by April

Portugal’s economy, already battered hard by 2020s commercial shutdowns due to the Coronavirus pandemic, is facing a further haemorrhage of €15Bn by April as fresh lockdown measures come into force today.

Portugal’s president Marcelo Rebelo de Sousa said on Wednesday, “We all have to summon our strength and resistance to attain what we attained between March and May last year,” despite saying that the country would not be able to afford a second lockdown after last year’s which ended at the end of April.
Yet, here Portugal is again with the former President of the competition authority (Autoridade da Concorrência), Abel Mateus (Pictured) warning of the economic consequences of a second lockdown in an interview with Observador.
“The immediate blow for the first quarter of 2021 may actually be less than during the first wave of the virus,” he said, but “the economic destruction will be worse — because the economy won’t be able to bounce back this time in the way it was able to do last summer.”
This, he said, was because of a “cumulative effect of economic destruction with successive confinements,” he told the online news source.
“This is a big problem. The economy recovered to a certain degree in the third quarter of 2020, but after all the falls in production, it is still very fragile.”
A new blow (in the form of another lockdown) will be very “serious for people’s incomes and the situation of companies,” he stressed.
“Clearly, neither the prime minister nor anyone else wants to reach the intensity of the second quarter in lockdown,” reports Observador.
In fact, everything said so far has suggested it cannot exceed a month — irrespective of whatever additional measures of support the government creates.
The issue is that the vaccination programme will take time, with Portugal admitting it could take as much as a year.
Last year, the then finance minister Mário Centeno said that 6.5% of GDP “evaporates” with every month of lockdown, although he admitted the problem was no linear because a lot depended on economies Portugal was aligned with in the rest of Europe.
At the time, Mário Centeno warned a second wave of the virus could cause GDP to drop by more than 13%.
The truth is “no-one knows” what will happen to the economy in what is now considered to be the third wave of the virus.
Observador says, “It may be that the famous European bazooka of funding can (or cannot) be applied in time to give the economy the boost it needs this year. It may be that the government can reinforce social support; that the vaccination process will be sufficiently fast to guarantee a low level of infections which “saves” tourism, commerce and the restaurant sector for the next summer.” People simply don’t know.