Fernando Medina, flanked by economy minister António Costa Silva, and Labour minister Ana Mendes Godinho
Fernando Medina, flanked by economy minister António Costa Silva, and Labour minister Ana Mendes Godinho. Image: António Pedro Santos/ Lusa

Portuguese economy closes year “even better than predicted”

Growth of 6.8% is 0.3 percentage points above (even revised) estimates

Finance minister Fernando Medina – under continued pressure over the ongoing TAP golden handshake row (see new story to come) – had reason to crow yesterday: Portugal’s economy is closing the year even better than predicted. The 6.5% estimate written into the 2023 State Budget is up to 6.8%, a full 0.3 percentage points above forecasts.

This shows the “resilience” that Mr Medina has been emphasising during his tenure, and “defeats all the pessimists”, he said in a joint press conference with ministers António Costa Silva (economy), and Ana Mendes Godinho (Labour and Social Security).

The purpose of the event was to “take stock of the activity” in the areas of the various ministries and discuss prospects for the coming year.

Fernando Medina insisted that one has to go back 35 years to find growth similar to that which the country has enjoyed this year. And to think that the beginning of the year saw the government predicting only 4.9% growth.

The finance minister stressed the situation is indeed as prime minister António Costa outlined in his recent interview with Visão magazine: “”We will have a deficit that will be below 1.5% of GDP, meeting our goal of keeping it below 1.9%, which was the goal initially set,” he said, reiterating that this year too will see Portugal officially exit the group of Europe’s most indebted countries.

Quizzed over whether Portugal would follow Spain in slashing IVA on essential foods, Mr Medina considered that measures already put in place by the government “are more beneficial” than fiscal intervention – but agreed that there is no taboo over adjusting VAT. It is a question of “constant evaluation. “In 2023 we will do the same as in 2022: a permanent monitoring of the economy, the evolution of prices and taking measures that can most quickly reach families and businesses,” he pledged.

António Costa Silva meantime admitted that ‘execution’ of the famous Brussels’ ‘bazooka’ of recovery and resilience funding is “below objectives”, adding that the government will be “dedicating itself” from January, with “all the organisations” involved, on how to simplify administrative procedures that seem to be holding up the process.

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