Economists think growth over 2% unlikely for 2024

Key Portuguese economists think it highly unlikely that Portugal’s economy can grow more than 2% for 2024 as a whole.

The opinions come after the government has estimated that the economy could grow above 2.0% on average like for like in the third and fourth quarters of the year.

However Portugal’s National Statistics Institute (INE) estimates that the economy would have to grow more than 2.5% in the third and fourth quarters of this year to achieve the government’s 2% target.

In the second quarter, Portugal’s GDP was 1.5% up compared to the same period last year, the same rate seen in the first three months of the year according to INE data published on Tuesday.

Growth essentially stagnated (0.1%) compared to the previous quarter which stood at 0.8% between January and March.

The senior economist at Banco Carregosa, Paulo Monteiro Rosa told the online news source ECO that it would be “very difficult to imagine an economic growth scenario above 2% in Portugal in 2024 because of the unfavourable economic effects of the European Central Bank’s restrictive monetary policy which has gradually spread to all activity sectors”.

The director of the Studies Office at the Forum for Competitiveness, Pedro Braz Teixeira warned that data released by the National Statistics Institute meant the government’s estimates for the year would necessarily be reviewed downwards since preliminary data for the world’s economy for the third quarter showed a slowdown, with particularly negative results for Germany.

Ricardo Ferraz from ISEG and the Universidade Lusófono believed that growth above 2% was not impossible bu would be difficult given the overseas economic environment which was “not the best” in terms of worrying geopolitical tensions that were growing. “We are living in a type of Cold War 2.0 and that’s not good for the economy”, he said.

João Borges Assunção of the NECEP – Católica Lisbon Forecasting Lab told ECO believed that Portugal’s growth would be below 2% overall for this year.

The Governor of the Bank of Portugal, Mário Centeno, has said that the latest data on Portugal’s economic growth forecasts from the INE fell short of the government’s forecasts but were not sufficient to change the “medium term outlook”.