European Commission Winter Forecast - Portugal
In the Winter Forecast, the European Commission (EC) acknowledges the success of the economic strategy implemented by the Portuguese Government. The Commission improves the majority of the 2016 and 2017 projections when compared to their latest Autumn Forecast.
The deficit projection was revised downwards by 0.4 p.p. in 2016 and by 0.2 p.p. in 2017. Portugal will exceed the deficit targets it committed to. Growth was revised upwards to 1.3% in 2016 (from 0.9%) and to 1.6% in 2017 (from 1.2%). The EC forecasts came closer to those of the Government and, in the case of economic growth and unemployment, even surpasses them. This confirms the conservative approach adopted by Portugal in the 2017 State Budget.
The Commission also improved its projection for the structural adjustment in 2016 from -0.1% to 0%. However, the final deficit numbers for 2016 will render the improvement in the structural balance even stronger.
The EC confirmed the sustainability of the growth pattern of the Portuguese economy, which will maintain an external surplus over the projection horizon. It also recognized the pick-up signs in private investment by the end of 2016 and early 2017, which builds on increased competitiveness of Portuguese goods and services, confidence and improved credit conditions. The reinforcement of the investment environment and the stabilization of the financial sector remain top priorities for the Government.
Throughout the forecast horizon, the deficit will remain clearly below 3% and the debt ratio will decline. As such, the durable and sustainable correction of the deficit guarantees the abrogation Excessive Deficit Procedure this year.
Lisbon, February 13, 2017