Lisbon, Oct. 2, 2024 (Lusa) - The International Monetary Fund (IMF) has revised downwards its forecast for the growth of the Portuguese economy this year, from 2% to 1.9%, according to its final Article IV report.

In July, in the preliminary conclusions of its Article IV visit to Portugal, the IMF predicted growth of 2%, which it has now revised to 1.9%, a figure that is lower than the government's estimate (2%), according to what was conveyed to the parties at the meetings on the 2024 state budget.

For the IMF, "Portugal has recovered strongly from the successive shocks that have hit the global economy since the pandemic", as stated in the note released today (Wednesday) on the conclusion of the Article IV consultation, with "growth in 2023 continuing to exceed the Euro area average, driven by strong private consumption, net exports and investment supported by European Union (EU) funds".

The institution projects that "growth should remain robust in the short term, and inflation should decelerate further", but warns that "low productivity growth, an ageing population and subdued investment remain constraints to higher growth and better living standards in the medium term".

As for prices, the IMF predicts that inflation, as measured by the Harmonised Index of Consumer Prices, which allows for international comparisons, will be 2.5% this year.

As for the budget balance, the IMF remains confident that Portugal will record a surplus of 0.2% of GDP, while public debt should fall to 94.4% of GDP.

The IMF Executive Board's assessment also highlights the warning that "Portugal still faces long-standing structural problems of demographic pressures, insufficient investment and low productivity that restrict potential growth".

Against this backdrop, the officials "encouraged the authorities to maintain a prudent fiscal policy, closely monitor risks in the financial sector and promote greater productivity and green transition, including by continuously leveraging EU funds".

MES/AYLS // AYLS

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