Banco de Portugal raises economic growth forecast to 6.7% this year – Fora de Campo
The Bank of Portugal (BdP) is more optimistic and now estimates that GDP will grow by 6.7% in the year as a whole, despite anticipating a deep brake in the second half of the year. In the Economic Bulletin released this Thursday, October 6, the central bank estimates that the Portuguese economy will grow 6.7% this year, 0.4 percentage points more than anticipated in June, “continuing to benefit from the recovery of tourism and private consumption”. “The strongest recovery in activity in 2021 and in the first half of 2022 — second half of the October 2022 downward revision”, says the BdP in the Economic Bulletin of, released this Thursday, October 6th.
That is, after the economy returned to pre-covid levels in the first quarter, from then on there was a deceleration, which translates into a “relative stabilization of GDP” until the end of the year, the central bank expects.
If, on the one hand, the external and financial environment has been worsened by increases in inflation and interest rates, with adverse effects on real disposable income, on the other hand, the “good performance” of the market is mitigating these negative effects on GDP.
Savings and support ‘hold’ consumption
At the same time, an entity led by Mário Centeno highlights the “resilience” of private consumption. This is happening not only because of the “channeling the expenditure of part of the savings accumulated by families during the pandemic crisis, as well as
of support measures”.
In fact, the same as families after having justified the resistance of economic activity in the first reveal a “majority” to shocks. The BdP estimates that consumption will grow 5.5% this year (0.3 points more than previously expected).
The downward revision of economic growth in the second half of the year is therefore more due to the slowdown in investment than investment. If in June the forecast was that the Gross Fixed Capital Formation (GFCF) would increase by 5%, now it is only 0.8%.
At issue is the implementation of this Recovery and Resilience Plan (PRR), not only through public but also private means, which in the first half of the year was far below the forecast for the year as a whole. The evolution of public consumption was revised downwards, to 2%.
On the other hand, exports of goods and services maintain a high dynamism (17.9%), implying additional gains above the market share. “This evolution is driven by exports of services, in particular those related to tourism”, explains the BdP.