… but it is all set to change in 2024
Good news coming from the European Commission has given the government opportunity to bask in the growth of the Portuguese economy.º
As Expresso outlines, “after having achieved the third highest growth rate among the 27 countries of the European Union (EU) last year, the Portuguese economy is once again among the fastest growing in the EU this year. This is what the spring projections of the European Commission (EC), published on Monday, indicate”.
Another highlight is that Brussels believes the deficit will stay at 0.1% of Gross Domestic Product (GDP) this year – the third best record in the single currency area (and the fourth in the whole EU). “This is a better performance than the ‘hard-line’ countries such as Germany or the Netherlands”, stress reports, explaining that overall, the figures place Portugal in fourth position among the EU 27.
But the scenario is much less positive for 2024, when “Portugal falls to 18th place”.
With political crises very much the order of the day nationally, the government has done its utmost to promote the ‘good economic news, with PS Socialist party spokesman Eurico Brilhante Dias actually saying that the European Commission’s forecasts are “the mirror of a well-governed country, on the right track”.
It is not an impression shared by opposition parties. Very much as political commentators have been saying, “people cannot eat statistics/ figures on a spreadsheet”. Even the prime minister stressed that “when we have good news in the economy, this doesn’t mean we can relax (…) Just as when one is riding a bicycle, either you keep pedaling and the economy continues to grow, or you stop and the bicycle stops, and can even fall off the tracks”.
This was not said lightly: the nitty gritty of the forecasts show that unemployment is set to rise to above the EU average this year; inflation will remain higher than 5% (even though this comes in below the average of the eurozone and the 27 member States), and GDP per capita in terms of purchasing power still puts Portugal “almost at the bottom of the table, falling from 21st slot to 22nd, being overtaken by Romania”-
Thus peddaling hard will most certainly remain the order of the day.
But to give the government its moment in the sunshine, reports highlight the fact that the country has reached a point of “close to zero deficit”, which could translate, says Finance Minister Fernando Medina, into reductions when it comes to income tax.
This however was tempered by the caveat: “we cannot take measures (including tax measures) that we later can’t fulfill”
The tables:
According to Brussels’ projections, Portugal’s position this year in terms of GDP comes in below Ireland (5.5% growth, up from February’s 5% ); Malta (3.9% revised from 4.1%), Romania (3.2%, revised from 3.5%) and Greece (2.4% revised from 1.9%).
Next year’s projections however see the country fall 14 slots, to a growth of 1.8%, below Ireland, Malta, Romania, Estonia, Latvia, Hungary, Cyprus, Lithuania, Poland, Czech Republic, Luxembourg, Bulgaria, Croatia, Slovenia, Slovakia, Spain and Greece.
More support for struggling families?
This perhaps is where the true situation reveals itself: “In spite of the new projections for the Portuguese economy have been seen with some optimism by the minister of finances and the government, Fernando Medina warns that Portugal has to be prepared for adverse situations”, writes SIC Notícias.
Said Mr Medina today: “If the current projections for the Portuguese economy come true, this will allow us to look at the entire budgetary year 2024 and beyond in a more solid manner, but we should bear in mind that we have to take steps that are compatible with the length of our legs”.
