The OECD has revised upward the growth outlook for the Portuguese economy this year to 2.5%, driven by PRR and exports, namely tourism, which has become the most optimistic of the major national and international economic institutions.
In the Economic Outlook Update for 2023 released this Wednesday, the Organization for Economic Co-operation and Development (OECD) predicts Portugal’s gross domestic product (GDP) to grow at 2.5% this year and 1.5% in 2024. while previously indicated growth of 1% this year and 1.2% in 2024.
This year, the Public Finance Council (CFP) predicts an expansion of 1.2%, the Bank of Portugal (BdP) of 1.8%, the International Monetary Fund (IMF) of 1%, the Ministry of Finance of 1.8% and the European Commission of 2 ,4%. .
The OECD highlights the role of the Recovery and Resilience Plan (PRR) in boosting public investment, but warns that high uncertainty and rising interest rates will continue to weigh on business and housing investment.
The projected pickup in activity among trading partners will support exports, mainly services, according to the report.
On the other hand, he points out that “despite the dynamic wage dynamics, consumption growth will be moderate as job growth slows, high inflation continues to reduce purchasing power, and rising interest rates increase the cost of servicing debt.”
The OECD forecasts for this year that exports of goods and services will grow by 8%, imports by 3.5%, domestic consumption by 0.6% and investment by 3.1%.
In a portrait from earlier this year, he highlights that as energy and food prices remain high and interest rates continue to rise, domestic demand growth has slowed and inflation is reducing purchasing power.
However, RRP spending, fiscal support measures of around 3.7% of GDP in 2023, and increased trading partner activity keep the activity going, citing as an example GDP growth of 1.6% in the first three months of 2023 driven by “significantly strong export growth.”
The OECD stresses that RRP reforms and investment have “great potential” to support growth.
“Ensuring full implementation of PRR maximizes benefits. Further improving access to quality childcare will enable more women to enter the labor force and help reduce labor market inequalities,” he adds.