Former finance minister João Leão believes Portugal’s GDP growth could top 6% this year, but points to a slowdown in 2023, with the eurozone stagnating or even recession, advocating a prudent strategy.
In an interview with Lusa, the former finance minister highlights the impact of the current international context with the slowdown in economic growth caused by the war, rising inflation with very high uncertainty and for the first time in many years that the markets have returned to be very attentive to the financing of countries and interests in order to determine the limitations of the Portuguese economy in the coming year.
Although this year I believe that, given a “very strong” first semester, it is “very likely” that gross domestic product (GDP) growth will be above the 4.9% target expected by the government, acknowledging that it is “up to possible that it will be above 6% growth” — which says “this is a very good indicator” — a slowdown is expected for 2023.
“I was not surprised that there was a strong economic slowdown in Europe during the year. Growth is already expected – European Central Bank, OECD [Organização para Cooperação e Desenvolvimento Económico] – close to 0%, and it is not surprising that Europe was even in a recession,” he notes, stressing that “Portugal will not stop being affected” as “it is a very open economy and very well integrated into the European market.”
Thus, the former minister expects “a strong economic downturn and that growth will be revised downward next year.”
Among the sectors of the Portuguese economy most affected should be tourism, with a slowdown in the rate of improvement that has been registered, as well as construction, especially housing, reflecting higher interest rates.
High uncertainty is added to this scenario: “We do not know how long the war will last, what impact the war will have this winter, next year on energy prices. The uncertainty at the moment is very high.”
“Energy prices are causing a very large loss of income across Europe. It is estimated that the increase in the cost of energy in Europe will triple this year compared to the average for the past three years and will amount to about 6% growth. GDP,” he said, stressing that this is “a severe shock that has not been seen for many decades and which, therefore, generates large economic effects, certain uncertainty and it is possible that economic growth will slow down next year.” across Europe ., with inevitable consequences in Portugal”.
In this context, although he emphasizes that “Portugal enters this crisis well prepared, with significant debt reduction”, the current Vice-Chancellor of ISCTE – Instituto Universitário de Lisboa remains convinced that “correct calculations” and prudence must be part of the budget strategy, but with a “balance”.
“To date, Portugal has achieved very positive results in public finances with the right accounts. This year it may reach a public debt below 120%. [do PIB]which was a remarkable result,” he emphasizes, defending that “correct calculations do not mean not looking at other areas”, looking for a “balanced policy”.
For João Leão, Portugal “wins” if “it has a clear policy from a financial point of view, a policy with a clear trajectory to reduce the public debt in the medium term, and this creates more resources, more conditions and more funding for the country and everything else.”
The former Chancellor of the Exchequer, who was Secretary of State for the Budget from 2015 to 2019, argues that “on the contrary, if it is a policy like that of the English government, in the short term, without planning, without justification, then a year later cancels what was made the following year because he was running out of resources.”
“It is important to continue on the path of reducing public debt and improving public accounts, but this must be done in a balanced way along with the country’s other priorities. This balance must be achieved, which was achieved and which is very important,” he stressed, pointing to the issues of energy, ecology, infrastructure, support for families and companies most affected by the crisis.
“All this is part of a very important package of measures to ensure that Portugal continues to grow,” he stressed.
Author: Lusa
Source: CM Jornal
I’m Tifany Hawkins, a professional journalist with years of experience in news reporting. I currently work for a prominent news website and write articles for 24NewsReporters as an author. My primary focus is on economy-related stories, though I am also experienced in several other areas of journalism.