Economy should show ‘significant growth’ despite Ukraine war, energy crisis, says finance minister
Finance Minister João Leão on Monday said that, despite the “unpredictability” caused by the war in Ukraine due to the Russian invasion and the effects of the energy crisis, the Portuguese economy will register “quite significant growth” this year.
“At the moment, we are working on a scenario, both at a European level and nationally, of significant recovery [of the economy] this year,” João Leão assured.
Speaking to Portuguese journalists in Brussels, at the beginning of a meeting of EU finance ministers, Leão stressed that, “even if the economy had more difficult times this year, in which there was no major growth in chain, Portugal has a boost that comes from the strong recovery at the end of last year and which allows, even in a more adverse scenario, for significant growth”.
Not least because “Portugal stands out at European level as one of the countries expected to grow most in the whole of Europe,” according to forecasts from the European Commission and the Organisation for Economic Cooperation and Development (OECD), he added.
“We are working on a scenario that is more in line with what is being built at European level, which has a downward revision, but which still gives a strong growth outlook for this year,” João Leão insisted.
Even so, the leader warned that “if the situation in Ukraine worsens and if the conflict lasts a long time, with repercussions mainly in terms of energy and gas supply, it may have more serious consequences in terms of production at European level.
“And, in this context, the scenario may be more adverse, but growth is still expected this year because […] we started from a post-pandemic level and, therefore, there is a lot of margin for recovery of the economy,” he stressed.
According to the minister, conditioning this recovery is, even so, the “type of sanctions that have been applied and the way in which Russia has retaliated with sanctions,” namely in the area of energy.
Fuel prices go up dramatically
Asked about the energy crisis, at a time of significant increases in fuel prices in Portugal, João Leão acknowledged that “the impact has been quite sharp and there is great uncertainty about developments in the near future.
“What is important in this context is to maintain the ability of countries to support businesses and families in this demanding process. The Portuguese government has been taking a set of measures and still has to implement [another] set of important measures to help in this process,” he concluded, also recalling the “strategic guideline to reduce dependence on Russian gas“.
The European Commission last week proposed the gradual elimination of dependence on fossil fuels from Russia before 2030, with a focus on LNG and renewable energy, estimating a two-thirds reduction in Russian gas imports by the end of the year.
The communication came at a time of heated armed confrontation in Ukraine caused by the Russian invasion, geopolitical tensions that have been affecting the European energy market, since the EU imports 90% of the gas it consumes, with Russia responsible for about 45% of these imports, at varying levels between member states.
Russia is also responsible for about 25% of the EU’s oil imports and 45% of coal imports.