Bank of Portugal downgrades growth hopes for 2025

 In Bank of Portugal, Economy, GDP, Growth, News

Expectations that Portugal can grow its economy beyond 1.6% for 2025 continue to be limited according to the Bank of Portugal’s May bulletin after its downward revision to 1.6% last week from 2.3% (best estimate) at the start of the year.

The Bank of Portugal says Portugal could only achieve growth beyond 2% if it fully (or close to fully) executes its public investment programme for 2026, including accelerating the execution of the Portugal Recovery and Resilience Plan which is lagging behind on deadlines on around 80% of projects.

The implementation of these projects, that have to be completed by the end of 2026, would represent a fifth of Portugal’s growth for 2026 and bring Portugal’s GDP growth to 2.2%.

However, the contribution from public investment would not be as high as expected private consumption which the BoP sees accelerating, but nevertheless supporting almost half of projected growth, but far from the 2.7% promised by Portugal’s Democratic Alliance coalition party in the run-up to the general election which it won on May 18.

Without projected public investment, BoP calculations suggest that in practice Portugal’s GDP will struggle to rise beyond 1.6% and could even tank to as low as 1.7%. For 2027, the BoP suggests GDP growth of around 1.7%.

Photo: Governor of the Bank of Portugal, Mário Centeno. ANTÓNIO PEDRO SANTOS/LUSA
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