The collateral damage of winter storms, a new war and global uncertainty have combined to compromise Portugal’s immediate economic future. According to Brussels’ spring economic forecasts, released today, the country will go from a surplus to a deficit of 0.1% of GDP this year.
The European Commission cites the impact of support measures following the storms, and tax reductions – and sees the country’s deficit increase further in 2027, to 0.4%, “assuming the maintenance of policies, while the government projects a zero fiscal balance this year.”
“The fiscal outlook faces risks related to the financial fragility of state-owned enterprises and contingencies from public-private partnership liabilities,” warns the European Commission.
With regard to public debt, Brussels anticipates that the downward trajectory will continue, “albeit at a slower pace”. The forecast is that the ratio of public debt will reach 87.6% of GDP in 2026 and 86% in 2027.
Inflation, meantime, is expected to rise to 3% this year – driven by energy price rises – before slowing to 2.3% in 2027 (presumably, on the basis that the current crisis is expected to ‘work out’), while ‘core inflation’, which excludes energy and food, is expected to rise at a slower pace, to 2.4% both this year, and next.
All round, the Commission has highlighted what it calls Portugal’s “very good economic performance”.
Speaking to a group of economic journalists, including Lusa, European Commissioner for the Economy Valdis Dombrovskis, has said: “Overall, I would say that Portugal’s economic performance is very good. Growth rates for both this year and next are forecast to be above the EU – 1.7% GDP growth this year and 1.8% next year”, furthermore, “unemployment will continue to fall gradually, and so on, so overall, a good performance,” he said.
The forecasts are more pessimistic than those of the government, which has also revised its estimates for this year to 2% growth, according to the 2026 Annual Progress Report submitted to Brussels in April.
Source material: LUSA