Economy will grow 4.8% this year, reiterates Banco de Portugal – Observer
The Portuguese economy should grow 4.8% in 2021, reiterated this Wednesday the Bank of Portugal in the presentation of the Economic Bulletin in October. If this growth is confirmed, the banking supervisor points out, it will mean that the Gross Domestic Product (GDP) will approach the pre-pandemic level at the end of the year.
“The recovery of activity reflects the control of the pandemic, through the vaccination process – with positive effects on the confidence of economic agents – and the maintenance of expansionist economic policies”, says Banco de Portugal, also anticipating that it will by 0.9% in 2021.
In a press conference, Mário Centeno spoke about the challenges facing the economy at the moment. Right from the start, “the country and the companies, the families, left the period of bank moratoriums in September. This is a challenge that everyone is facing right now that I would like to underline.
We have a vision that this challenge will be overcome, in the sense that we are going to resume regular payment of the debt service either by companies or by families and, with the measures that have been implemented or others that may arise, we see the issue calmly ” , says Mario Centeno.
This is a quarterly economic bulletin which, in this October issue, as usual, does not include new ones for 2022. The June forecast for next year was 5.6%.
“In the first half of the year, the fall in activity and subsequent recovery were more accentuated in services that involve greater social contact. Spending on services is pending below the pre-pandemic period, given the persistence of precautionary behavior, the slow recovery of tourism and a greater use of teleworking”, says Banco de Portugal. “In contrast, expenditure on goods is already up, albeit constrained by supply disruptions,” the document adds.
Private consumption grows 4.3% in 2021, adds the supervisor, highlighting the “growth of disposable income and the gradual reduction in the savings rate”. “The growth of disposable income in real terms results from the strong recovery of employment and the dynamism of nominal wages, being mitigated by the increase in information”, notes Banco de Portugal.
Public consumption is expected to grow 5.2% in real terms, after almost stabilizing in 2020. Investment increased 5.6%, supported by recovery prospects, European funds and credit at low interest rates and guaranteed by the State ”, says the Bank of Portugal.
Exports of goods “grow 10.7% in 2021, in line with the dynamism of external demand directed at the Portuguese economy”, says Banco de Portugal, noting that “disruptions in the supply chains will impact the evolution of this aggregate until at the end of the year”.
On the other hand, “service exports continue to be conditioned by the impact of the pandemic in 2021, growing by 7%, after a reduction of 37.2% in the previous year”. “At the end of the year, service exports are around 20% below pre-pandemic values”, the remaining supervisor.