Gross GDP growth and declining inflation offer good prospects for the rest of the year, Medina guarantees

The finance minister considered on Wednesday the confirmation of the Portuguese economy’s growth in the first quarter and the decline in inflation to 4.0% in May as “good news”, which opens up good prospects for the rest of the year.

“This is good news for the Portuguese economy, for Portuguese families and for what we can expect from 2023,” Fernando Medina said in statements to the Lusa news agency, reacting to data released this Wednesday by the National Institute of Statistics (INE). ) regarding the growth of gross domestic product (GDP) from January to March (an increase of 2.5% year on year and 1.6% year on year) and the evolution of the consumer price index (CPI, which fell from 5.7% in April up to 4.0% in May).

With regard to GDP growth, the minister emphasized that this is “a confirmation of the growth of the Portuguese economy, mainly due to exports”: “The export of services with a focus on tourism, as well as the export of goods, that is, Portugal’s industry in demonstrating a very significant ability to advance in relation to its export markets and, thereby, contribute to increasing the wealth of our country,” he supported.

For Medina, the zero annualized contribution of domestic demand to GDP in the first quarter “turns out to be positive” in an environment of high inflation and rising interest rates, “leaving room for export growth.” their contribution to the growth” of the economy.

On May’s decline in inflation – a quick INE estimate points to a 4.0% year-on-year change in IPC – the official recalled that “inflation has already been falling for several months”: “This reinforces our expectations that we will soon have months with inflation below 3%” and “this is very important for families as it tends to stabilize their views on purchasing power and the decisions they have to make,” he said.

“These data indicate that we are on track for a situation that will be much more stable, much more predictable and much less turbulent in terms of price evolution than what we felt last year, and which makes a huge difference.” , he stressed, adding: “The prospect that we had that inflation would be below 3% for several months this year has now become more solid.”

In addition, the minister referred to labor market data published today by INE, which “show that not only employment continues to grow (the number of employed people in the first quarter of this year continues to grow compared to last year), but wages also: wages, declared in Social Security, in the first quarter of this year increased by 8%”.

In this way, he stressed, “a very important group of Portuguese is receiving a wage increase that already exceeds the expected inflation this year, which is important to mitigate the loss in purchasing power they had during 2022.”

Finally, the Minister of Finance pointed to the “evolution of household confidence indicators”, which in May rose to the maximum since February 2022, considering that “this is also the result of an important response that the Government gave in 2022 and already in 2023 regarding support and transfers families.”

“I emphasize here the importance of fiscal policy and what has been done in terms of transfers and support for families, because this support for stabilizing incomes and reducing the loss of purchasing power that the context of inflation obviously brings has been very important in stabilizing the incomes and expectations of families “, he stated.