Portugal’s budget deficit in 2016 is expected to reach 2.7 pct of GDP

4 May 2016

The budget deficit in Portugal is expected to be 2.7 percent of GDP this year and 2.3 percent in 2017, the European Commission said Tuesday in Brussels in its report on the Spring economic forecasts.

These deficits are higher than those included in the Stability and Growth Programme recently presented by the Portuguese government, which provides that the budget deficits in 2016 and 2017 will be 2.2 percent and 1.4 percent of GDP, respectively.

In its Winter report the European Commission forecast that Portugal would this year post a budget deficit of 3.4 percent, a figure that dropped after the Portuguese government introduced additional measures to contain spending.

Considering that the Portuguese economy will grow 1.5 percent this year and 1.7 percent next year – while the government provides values ​​of 1.8 percent in 2016 and in 2017 – the Commission warns that Portugal may be affected by “political uncertainty, developments in financial markets and a persistent deleveraging pressure on the private sector. ”

The Commission also said public debt should be reduced to 126 percent of GDP in 2016, “mainly due to expected sales of financial assets, including Novo Banco” and to 124.5 percent in 2017, “due to primary budget surpluses and the growth of domestic demand.” (macauhub/PT)