Government predicts 4% GDP growth for 2021
The Portuguese government has forecast growth of 4% of GDP this year and 4.9% in 2022.
The estimates were advanced by the Portuguese finance minister João Leal after the government approved the Stability Programme 2021/2025 at the Council of Ministers meeting on Thursday.
The forecast was below the 5.4% originally forecast in the State Budget for 2021, but despite the revision downwards, João Leal said that the Stability Programme “foresees strong growth in GDP this and next year.”
“For both years taken together, we expect that the economy will grow around 9%” said the minister, pointing out that this rate would enable the economy to “overtake the growth achieved in 2019 in the pre-pandemic period by 2022,” he said.
The minister explained the downward revision for 2021 because of the effects of the third wave of the pandemic which forced a lockdown in the first quarter of this year and which led to a significant stoppage in economic activity.
On the other hand “with the success and rollout of the vaccination programme against Covid-19, this government foresees a strong recovery from the second half of the year.”
The minister added that at the end of 2022 Portugal’s GDP would be a percentage point above the 2019 level,” a reduction “shared by other entities,” such as the IMF which also shares an optimistic forecast.
“In terms of investment, we will see recovery not just in private investment but also in public investment, benefiting from the powerful impact of the Recovery and Resilience Programme (RRP),” said João Leão.
This year “public and private investment will grow significantly as will exports,” said the finance minister, estimating that since the Stability Programme would run until 2025, the RRP would have “economic impact of €22Bn.”
Investment to grow 8%
The Finance minister also estimates that investment will rise 8% next year. While the Government reviewed GDP growth downwards to 4% it also reviewed the budgetary deficit upward to 4.5%. However, the minister said that Portugal’s economy would grow 4.9% (3.4% SB2021).