Portuguese government forecasts 1.5% economic growth for 2024

7 months ago 28

The Portuguese economy will grow by 1.5% this year, in line with what was projected in the 2024 State Budget and a tenth lower than the macroeconomic forecasts set out in the Democratic Alliance’s (DA) election manifesto, the government maintained on Monday.

The projection is included in the Stability Programme (SP) 2024-2028, which the government sent to parliament on Monday and will be sent to the European Commission this month.

The macroeconomic scenario presented by the executive is designed based on invariant policies, i.e. it only takes into account the policies designed by the previous government and measures already planned.

The Finance Ministry forecasts GDP growth of 1.5% this year and 1.9% in 2025, based on the information available up to 31 March.

The projection underlying the 2024 State Budget (OE2024) presented by the previous government pointed to an expansion of 1.5% this year, while the electoral programme of the DA (the coalition that brought together the PSD, CDS-PP and PPM for the 10 March general elections) based this year’s projection on the 1.6% of the Public Finance Council.

In the finance council’s updated forecasts, published this month, the organisation led by Nazaré da Costa Cabral maintained the growth of the Portuguese economy this year at 1.6% and predicted an expansion of 1.9% in 2025.

However, while the Bank of Portugal sees GDP rising by 2%, the European Commission and the Organisation for Economic Co-operation and Development (OECD) see it increasing by 1.2% and the International Monetary Fund (IMF) – which will publish new forecasts on Tuesday – by 1.5%.

In its electoral programme, the DA predicted a 2.5% growth for 2025, increasing to 2.7%, 3% and 3.4% in 2026, 2027 and 2028 respectively. In the 2023-2027 Stability Programme, the previous Executive foresaw a 2% expansion in 2024 and 2025.

The submission of the Stability Programme this year is mainly a formality of timing, as the document loses weight with the new EU budgetary rules, being replaced by the medium-term budgetary and structural plans that member states must submit to Brussels by 20 September.

Brussels will not rule on the countries’ stability programmes, having allowed the submission of a simplified programme that would even allow the submission of only two tables related to the Recovery and Resilience Plan (RRP).

The government will start negotiating the new medium-term programme with the European Commission in the summer, and the macroeconomic scenario, which will impact the new policy measures, will not be known until September.

The stability programme, approved by the Portuguese cabinet on 11 April, will be discussed in parliament on 24 April. The CFP decided not to comment on the SP as it is based on a no-policy-change scenario.

(Lusa.pt)