The generalised cooling of the global economy threatens 30 billion euros worth of Portuguese exports.
This is the dismal picture painted this week following the latest economic projections published by the IMF (International Monetary Fund).
Explains Diário de Notícias/ Dinheiro Vivo, Portugal wasn’t actually mentioned in the IMF’s report, but “the signs are very disfavorable, bearing in mind that the Portuguese economy depends heavily on exports and the maintenance of current levels of foreign investment”.
According to the IMF, eurozone growth this year will be 1.3%, “a tenth less than anticipated in October last year, dragged down by the (poorer) performances of Spain and Germany”.
Indeed, Spain and Germany are the only major eurozone economies to see their growth forecasts cut by the IMF, but the problem, says DN/DV, is that Portugal does a great deal of business with both countries.
Every year Portugal exports more than €18 billion in goods and services to Spain (that’s 20.4% of total exports) and Germany buys more than €10 billion euros worth (in other words, 11% of total exports).
“Just to give an idea of the scale and degree of exposure, together the two markets absorb almost two-thirds of national exports – and when it comes to direct foreign investment, the situation is much the same”, says DN.
“Spain is the largest direct foreign investor in the Portuguese economy”, while Germany is responsible for “almost €5 billion in direct foreign investment”.
What this means now that the eurozone faces “one of the weakest levels of growth since the financial crisis” is what is starting to worry everybody – particularly as the IMF is far less optimistic about growth in Portugal this year than our own finance minister Mário Centeno.
Says DN, the institution now run by Bulgarian Kristalina Georgieva estimated in October that Portugal would grow by only 1.6% this year, whereas Centeno was predicting 1.9%.
Given this week’s news, growth may well have to be revised downwards.