Portugal’s budget deficit predicted to be 3.4% of GDP in 2016

5 August 2016

Portugal’s budget deficit should stand at 3.4 percent of gross domestic product this year, above the 2.2 percent forecast by the government and the 2.5 percent required by the Europan Commission, Fitch Ratings has predicted.

For 2017 that credit rating agency predicts that Portugal’s budget deficit will only decline by a tenth of a point to 3.3 percent, thereby keeping the country in the excessive deficit procedure, indicates a report released on Thursday.

Fitch also casts doubt on the government’s forecast of 1.8 percent economic growth this year, claiming that the economy may even slow down in 2016, growing by only 1.2 percent (revised down from the previously forecast 1.6 percent), whereas in 2015 it grew by 1.5 percent.

Preliminary figures show that an important factor of this slowdown is the contraction of investment in the first quarter of 2016, the agency asserts, also calling attention to weaker demand from Portuguese export markets such as Angola and Brazil.

In the 2016-2020 Stability Programme the government predicts a deficit of 2.2 percent of GDP (same as envisaged in the state budget) this year, 1.4 percent in 2017, 0.9 percent in 2018 and 0.1 percent in 2019, with a surplus of 0.4 percent of GDP in 2020.

In that document the government also predicts economic growth of 1.8 percent this year (same as the budget) and in 2017, 1.9 percent in 2018, 2 percent in 2019 and 2.1 percent in 2020. (Macauhub/PT)