Government forecasts economy to grow 1.5%
The government on Monday maintained that 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 Democratic Alliance’s (DA) macroeconomic forecasts in the electoral programme.
The projection is included in the Stability Programme (SP) 2024-2028 sent by the government to parliament today and which will be sent to the European Commission this month.
The macroeconomic scenario presented by the executive is designed on the basis of invariant policies, i.e. it only takes into account the policies designed by the previous government and measures already planned.
The ministry of finance forecasts Gross Domestic Product (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 legislative elections on March 10) based this year’s projection on 1.6% from the Public Finance Council (CFP).
In the CFP’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 predicts an expansion of 1.9% in 2025.
The Bank of Portugal (BdP) sees GDP increasing by 2%, the European Commission and the Organisation for Economic Co-operation and Development (OECD) by 1.2% and the International Monetary Fund ( IMF) – which releases new projections on Tuesday – by 1.5%.
In the electoral programme, the DA predicted growth of 2.5% in 2025, 2.7% in 2026, 3% in 2027 and 3.4% in 2028.
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, since with the new European budgetary rules the document loses the weight it once had, being replaced by the medium-term budgetary and structural plans, which must be submitted by member states to Brussels by 20 September.
Brussels will not rule on the countries’ SPs, having allowed the submission of a simplified programme, which would even allow the submission of just two tables related to the Recovery and Resilience Plan (RRP- the EU bazooka funds for post pandemic economic recovery).
The government will start negotiating the new medium-term programme with the European Commission in the summer and the macroeconomic scenario with the impact of the new policy measures will not be known until September.
The Stability Programme approved by the Cabinet on April 11 will be discussed in parliament on April 24. The CFP chose not to comment on the SP because it is based on a no-policy-change scenario.
