Lisbon, Sept. 4, 2024 (Lusa) - Portugal's Forum for Competitiveness predicts that the country's GDP will grow between 1.5% and 2% in 2024, which represents a downward revision of the projections it had released in July.
The previous forecasts pointed to economic growth of between 1.8% and 2.1%, but these figures were revised after the second quarter data was released, when the Gross Domestic Product (GDP) "slowed sharply, from 0.8% to 0.1%, while in year-on-year terms it stabilised at 1.5%", indicates the economic outlook note released on Wednesday.
The Forum admits that ‘in the coming months, the economy may benefit from some relief from personal income tax contributions and the pension supplement to be paid in October, but above all from the lowering of interest rates by the European Central Bank (ECB)’.
"However, the weakening of the international environment as well as the uncertainty associated with the approval of the 2025 state budget bill and the political implications it could have could lead to some retraction, especially in the case of investment," it says.
Thus, for the year as a whole, "growth should be between 1.5% and 2%, with the possibility of a slight improvement in 2025, if the significant international and national risks do not materialise in the meantime," the note reads.
The government's macroeconomic scenario should only be known in the state budget for 2025 and the Forum for Competitiveness anticipates that "the deterioration of the international environment could bring some disappointment to the macroeconomic scenario for 2025, despite the interest rate cuts by the ECB, which should take place this year and next".
"In turn, a less favourable economic climate will hamper the implementation of 2024 and take away negotiating leeway from the next budget," it adds.
And although the summary of budget execution up to July has already shown a surplus, the organisation points out that from September, IRS (personal income tax) revenue will suffer the effects of the new withholding tables and in October the extraordinary supplement will be given to pensioners, worth an estimated €400 million.
The Forum for Competitiveness is a private, non-profit association set up in February 1994 following the proposals made in the study Building Portugal's competitive advantages commissioned by the then Minister for Industry and Energy, Luís Mira Amaral, financed by a group of companies, business associations and other public and private organisations and under the direction of Professor Michael Porter.
The Forum for Competitiveness is an active institution in promoting increased competitiveness in Portugal, by stimulating the development of productivity in companies and cooperating with organisations, companies and university and non-university institutions, creating the necessary conditions for this purpose through initiatives related to business activity and public policies, the dissemination of information for competitiveness and debate between institutions and individuals on a professional, technical and independent basis.
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