OECD forecasts Portugal’s GDP will grow 1.1 pct in 2014

7 May 2014

The Organization for Economic Cooperation and Development (OECD) expects the Portuguese economy to post growth of 1.1 percent in 2014, which is a significant increase compared to the 0.4 percent growth it projected six months ago, according to its Spring Economic Outlook.

The report, which was published Tuesday, outlines that the Portuguese economy will grow 1.4 percent in 2015, which is 0.3 percentage points more than the previous forecast and 0.2 percentage points more than the projection from the Portuguese government.

According to the Spring Economic Outlook Portugal’s public debt will continue to rise until 2015 when it will be 131.8 percent of gross domestic product (GDP) and  the OECD calls for the country to adopt budget consolidation measures by 2030 in order to reduce public debt to 60 percent of GDP.

The OECD’s projections for public debt growth are more pessimistic than those of the Portuguese government, which in its Budgetary Strategy Document (DEO) expects debt to reach 130.2 percent this year and fall back to 128.7 percent in 2015.

The OECD considers it is possible for Portugal to stay within its 4 percent deficit target as agreed for its bailout programme and expects it to fall to 2.4 percent in 2015, which is below the target set of 2.5 percent.

The European Commission kept its projection for Portugal’s economic growth unchanged at 1.2 percent in 2014 and 1.5 percent in 2015, according to its own Spring Estimates, but warned of a number of risks.

The commission warned “that the risks to the macroeconomic outlook are negatively inclined,” as “recovery of credit, high levels of debt in the private sector and budget consolidation that is underway may be a greater obstacle than expected for domestic demand.”

In the document the Commission said that private consumption was expected this year t rise by 0.7 percent and 0.8 percent in 2015, compared to a drop of 1.3 percent in 2013. It expects exports to continue to perform well, despite showing signs of cooling, with growth of 5.7 percent this year compared to 6.1 percent in 2013. (macauhub/PT)