Portugal to escape recession in 2023

Portugal will escape the recession that will affect most of the Euro Zone in 2023 according to economists at Credit Suisse.

The country will grow 0.8%, an amount that contrasts with the 0.2% contraction expected for the rest of the Euro Zone economies.
“It is probable that Portugal will escape the recession next year and the Portuguese economy will perform better than its European partners in 2023, but high levels of inflation and a tightening of financial conditions will, nevertheless, affect economic prospects”, states the Swiss bank.
“We foresee that growth will still be more moderate, but we do not expect a total recession. The labour market will remain resilient, with the expectation that the government will spend around 2% of GDP from EU Next Generation Funds in the coming year. Overall, we expect a real GDP growth of 6.7% in 2022 and 0.8% in 2023”, says the bank’s researchers.
Regarding inflation, (10.7% in October), CS expects that it will fall “over the next quarters as energy and foodstuff price increases gradually come down. We expect inflation to be 8% in 2022, 4.5% in 2023, both below the Euro Zone average of 8.6% for the end of this year and 6% in 2023.
The country’s budget performance “has been consistent: the deficit fell substantially over the past two years and there could be a surplus next year, despite weaker growth and higher nominal interest rates. This, in turn, will allow the debt to GDP ratio to fall in the coming years”.