2023 – a year of tailwinds and headwinds

 In Banks, Economy, News

The start of this year left companies and investors jittery, but with three tailwinds for 2023 there are reasons to be cautiously optimistic according to Leslie Rubio, Managing Director and Country Head of Citibank Portugal.

Text: Chris Graeme

Building resilience and capital will continue to be important for the banking sector in Portugal according to a leading banker.

Addressing business and industry leaders in March at event on the ‘Prospects for the Economy 2023’ organised by the American Chamber of Commerce in Portugal (AmCham), Leslie Rubio, who heads the Country Office for Citibank in Portugal, said that despite contrary geopolitical and inflationary headwinds, land with some “green shoots” was on the horizon.

Speaking from the financial sector’s perspective the banker reminded that the world had gone through three economic shocks in quick succession (The global trade war, the Covid-19 pandemic, and the war in Ukraine).

“We are living through economic disruption in a way not experienced since World War II. After Covid, just as we thought we could open up, we were then faced with an energy and food crisis which derailed the progress that had been made from decades of strong collaboration”, she said.

Leslie Rubio explained that Citibank had started 2023 with a view that: “we would see a succession of recessions in several countries, because of the war and its impacts on inflation, and interest rates, with growth being key drivers.

“It is true that as we have started the year, we will see some signs of macroeconomic recovery with slight signs of resilience with some ‘green shoots’ because of the positive action taken by the central banks to cushion and contain some of the impacts of inflation, with the IMF recently upgrading their expectations for growth forecasts. (World 2.9%)(Europe +0.8%)(Portugal 1%)

“It is a year which doesn’t look encouraging on the one hand, but with concerted action, showing some signs of improvement.”

Forecasting 2023 as a year with “headwinds and tailwinds”, Leslie Rubio believes that in terms of tailwinds inflation will reach its peak, with more demand for services and labour, in what has been a contained the labour market, while savings accumulated during Covid-19 have had a positive impact on resilience.

The second tailwind is that Europe has been more resilient than expected, again down to a combination of concerted action and diversification of energy supply, and the support of the EU financial packages. (Portugal received €16.6Bn in grants and loans)

The third would be the reopening of China (China announced in March that overseas tourists could return, however relations between the US and China soured by the second week that month).

This opening up of the Chinese economy would be positive for Europe despite the risk and unpredictability of recent Chinese actions.


In terms of headwinds, less liquidity and high interest rates which are necessary to contain inflation would have a negative impact on growth, so “getting a balance is very important”, while the geopolitical and social risks are still apparent.

“The conclusion is that we are going to navigate through risks, and from the financial and corporate sector we have to be resilient and manage risk in this enhanced risk environment”.

For banks, increasing interest rates are positive for margin and cost base, but negative for NPLs and *delinquencies (*Being behind on payments). “Banks have a very important role to play for resilience going forward and the Covid crisis demonstrated this”.

“We’re going to have to continue building the economy and developing resilience and capital will have an important part to play, while regulation is going to continue to be very tight,” sums up Leslie Rubio, Managing Director and Country Head of Citibank Portugal.

Citibank has been in Portugal since 1979, starting as a representative office before opening a full bank office in 1985. Its focus is on bringing International companies to Portugal, and helping US and other companies who want to do business in Portugal, and Portuguese companies who want to do business in the US and elsewhere.

© 2021 LUSA – Agência de Notícias de Portugal, S.A.