Portugal receives 2023 with budgetary relief, but does not escape the recession
It is not just families and companies that will feel the rise in interest rates combined with the inflationary effects on the prices of essential goods, the state will also see a rise in debt interest rates in 2023, this being yet another instrument used by the ECB to control the hybrids.
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The country bids farewell to a year that Filipe Grilo, professor of economics at Porto Business School, classifies as chaotic, but enters into another round of the sun, with the government registering an efficient slack to manage in 2023, which awakens this economist’s curiosity as to how he will manage this budgetary surplus, how he will explain it to international investors and outline strategies on the redistribution policy, whether on the left or on the right, in the context of recession.
Filipe Grilo has no doubts that the recession will reach Portugal at the end of 2023, at a slower pace than other European countries and still under pressure from the economic impact of the pandemic in China and the pressure of the war in Ukraine.
For the professor, despite the country living in a scenario close to full employment, the key variable for 2023 will be unemployment, which will depend on the response capacity of companies to the economic and financial challenges that will arise in the near future, despite the agreement of social consultation achieved in 2022, in his understanding, reveals the government’s agility in anticipating risk scenarios and disincentives to unemployment.
He foresees a worsening of the resistance rate of families, since the oath rates will continue to rise and with the loss of purchasing power, social tension will also increase, although he considers that it will be difficult to design new support measures, in addition to the activated by the government in 2022, the support of 125 euros given in October and 240 at the end of the year for the lowest income brackets.
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In a country with a fragile business fabric and composed of more than 90% of micro and small companies Taxes on extraordinary profits for large companies could have an impact on the rise in prices of some products, especially in the distribution sector.
Economists do not look to the new year with optimism due to the degree of intense factors such as the dimension of the Covid-19 crisis in China, which, being the “factory” of the world, can bring new pressures and the lack of knowledge of the rumor of war in Ukraine.
However, he hopes that Portugal will pass through the “rainy intervals” of this climate of crisis and wants to see the implementation of the SB2023 (State Budget), an instrument that he considers to be of little interest and with mere crumbs in terms of the new planned measures that represent only about 1 to 2% of the fixed expense.
Lisbon glow stood out in the black scenario of stock exchanges in 2022
The expression ‘annus horribilis’ entered the slang of brokers, analysts and investors in the capital market for good in 2022, but the Lisbon stock exchange ended up standing out, due to the profits recorded by the main listed companies, a large part linked to the energy sector.
GALP alone obtained a profit of 608 million euros in the first nine months of this year, which represents an increase of 86% compared to the adjusted net result of the same period last year and distributed 570 million euros to shareholders, of which 420 million were paid through dividends. Already the most valuable company on the stock exchange, EDP paid in 2022 around 750 million euros for last year’s profits. But these are mere examples of results that reflect the strong operational performance of some of the main companies that make up the PSI20, the main index of Euronext Lisbon.
For Henrique Tomé, an analyst at brokerage XTB, 2022 will be marked by volatility aggravated by the war climate, which ended up deepening the trend of generalized declines shortly after the invasion of Ukraine by Russia and which, little by little, has shown some signs of recovery.
The crypto market does not escape the negative balance that represented losses for investors, shaken by the lack of confidence generated by the bankruptcy of some leading companies in the world of cryptocurrencies.
For now, wait for the data from the so-called “Christmas Rally”, which characterized the final stretch of the year, the rise in consumption that characterizes this festive season and despite the positive signs coming from the North American economy, such as the from the left, the truth is that Europe is still immersed in a climate of conflict, without knowing when and if the war in the Ukrainian territory will end, if there is a new worsening of energy prices, including fuel and gas and what decisions will come out of the ECB in monitoring the Eurosystem, promised every six weeks, at least until the end of the first half of 2023, in order to determine which are the best instruments to control and supervise, whether it will involve the sale of internal assets, or a new increase in interest rates benchmark for the Eurozone.