Economy shrank 8.4% in 2020

Portugal’s economy actually shrank by 8.4%, not 7.6% as had been initially calculated by the National Statistics Institute (INE) which has revised the figure upwards.

It is a difference of eight percentage points which will have repercussions on the public debt ratio which will now stand at 135.2% of GDP instead of 133.6% estimated until now. The input of fresh information that revealed a greater contraction in accommodation, hospitality/catering and transport was behind the review.
“The results, which correspond to the final version in 2019 and the provisional version for 2020 for the National Accounts, mean an upwards review of the 2019 GDP figure by 0.2% in value and volume, and a downwards review for 2020 of 1.3% in value and 0.8% in volume on previously released data,” states the INE.
And adds: “The review of the amounts regarding 2020 was fundamentally determined by an even greater contraction than initially anticipated in activity areas such as accommodation, hospitality, catering, transport and warehousing”.
The statistics office updated its data for Portugal’s public accounts and now estimates that the budget deficit was 5.8%, one percentage point than estimated before.
The greater fall on the economy had a significant impact on the ratio of public debt that went from 133.6% of GDP to 135.2% in 2020.
This means that both in terms of public debt and GDP, the Government has a long way to go to return to pre-pandemic levels. These reviews could also have an impact on the macroeconomic scenario for the State Budget 2022 which is currently being prepared by the Ministry of Finances to be delivered with the outline budget on 11 October.