Jun 27, 2022
By EQTY Capital

Portugal Macro-Overview

Following Portugal’s 4.9% economic growth in 2021, the economy remains on this trend with a strong first quarter pushing projected economic growth to 5.8% in 2022, according to the European commission’s forecast. Although the adverse effect of higher commodity and energy prices are expected to be felt in the following year with an expected decrease in GDP growth in 2023, Santander’s Economic Outlook report indicates that it is not likely that the country will enter a recession.

Despite the inflationary pressure and global supply chain issues, the Portuguese economy is looking strong with low levels of unemployment and high individual and corporate savings rate. Indeed, Santander reveals that these lower levels of indebtedness are providing a safeguard to corporations and households to counter the effects of inflation on costs and higher interest rates. Amid external risks, prices are expected to stabilise towards the end of the year and domestic demand is expected to preserve its growth trend. The implementation of the national recovery and resilience plan (RRP), which will support Portugal in adapting more sustainable solutions and foster the country's green and digital transition. According to the European Commission, this initiative is already quickly rising investments in Portugal. Although the aftershocks of the pandemic and the Russia/Ukraine war are creating uncertainty across the globe regarding economic stability, the country is exhibiting strong macroeconomic indicators which provide positive economic forecast for the next period.

Reference: Santander, European Commission.