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Portugal’s political crisis won’t affect investment, says EC

Investment in Portugal won’t be affected, says Paolo Gentiloni

The European Commission (EC) said today that it believes Portugal’s political crisis will not affect investment in the country.

“Despite the crisis in Portugal, authorities have decided to approve the (State) Budget before the election and I do not believe this situation will impact investment in the country,” said EC Commissioner for Economy, Paolo Gentiloni.

His statements came on the same day that the EC slightly cut Portugal’s economic growth forecast to 2.2% this year, in line with the government, and to 1.3% in 2024.

“Economic growth has been slowing in 2023, while the labour market remains robust in a context of record employment and activity rates. GDP growth is expected to recover gradually over the forecast horizon,” says the Brussels report.

The European Commission says that strong growth in tourism and falling energy prices have “substantially” improved the trade balance up to August and expects the current account to remain in positive territory over the forecast horizon.

Still, it pointed out that imports are expected to grow faster than exports in 2024 and 2025, in line with the projected recovery in private consumption and investment.

Brussels’ projections point to growth in the Portuguese economy above the average for the area, for which it expects GDP to expand by 0.6% this year and 1.2% in 2024.

The European Commission also points out that, despite the economic slowdown, employment growth increased from rates close to zero at the start of 2023 to 1.3% in the summer months.

Employment and activity rates have reached record levels, while wages have grown faster than inflation,” it pointed out.

Brussels expects the unemployment rate to remain stable over the forecast horizon in light of the moderate growth prospects in the short term.

In average annual terms, the unemployment rate is forecast at 6.5% in 2023 and 2024 and at 6.4% in 2025.

The EC has also revised Portugal’s inflation rate upwards to 5.5% in 2023 and 3.2% in 2024.

Sources: RR and Lusa