Brussels is cutting Portugal’s growth rate to 2.2% this year and 1.3% in 2024.

The European Commission this Wednesday slightly cut Portugal’s economic growth forecast to 2.2% this year, as did the government, and to 1.3% in 2024.

In its autumn economic forecasts published this Wednesday, Brussels forecasts gross domestic product (GDP) growth of 2.2% in 2023, 1.3% in 2024 and 1.8% in 2025.

The European Commission’s forecasts are compared with those from the Treasury, which point to growth of 2.2% this year and 1.5% in 2024.

In the latest forecasts in May, the community leader pointed to growth of 2.4% this year and 1.8% in 2024.

“Economic growth slows in 2023, while the labor market remains resilient amid record employment and activity. GDP growth is expected to gradually recover over the forecast horizon,” the Brussels report said.

The European Commission said strong tourism growth and falling energy prices had “significantly” improved the trade balance by August, expecting the current account to remain in positive territory over the forecast horizon.

Despite this, the report notes that imports are expected to grow faster than exports in 2024 and 2025, consistent with a projected recovery in private consumption and investment.

Brussels forecasts show Portugal’s economy growing above the regional average, with GDP rising 0.6% this year and 1.2% in 2024.

The European Commission also highlights that, despite the economic downturn, employment growth has increased from a rate close to zero at the beginning of 2023 to 1.3% in the summer months.

“Employment and economic activity levels have reached record levels, and wages have risen faster than inflation,” he says.

Brussels expects the unemployment rate to remain stable over the forecast horizon, given subdued near-term growth prospects.

In average annual terms, the unemployment rate is projected to be 6.5% in 2023 and 2024 and 6.4% in 2025.