Lisbon, Oct. 10, 2024 (Lusa) - The Portuguese Public Finance Council (CFP) said on Thursday that the macroeconomic scenario presented in the draft budget for 2025 appeared to be probable and prudent, given the risks and uncertainty of the current outlook.
"Considering the risks of the Ministry of Finance scenario, the uncertainty of the current macroeconomic outlook and the existing projections for the Portuguese economy, the macroeconomic scenario underlying the DSB/2025 appears probable and prudent," the CFP said in the opinion ir released today.
It added that the macroeconomic scenario is "broadly in line" with the projections for the Portuguese economy, the prices of raw materials on the international markets, and the European Central Bank's monetary policy decisions.
Even so, the CFP pointed out that the projections for 2024, particularly for the components of the Gross Domestic Product, show "some inconsistencies" compared to the data revealed in the first half of the year.
As he pointed out, cross-referencing the 2024 forecast with the statistical information available up until the first half of the year makes it possible to approximate the implicit growth expected for the second six months.
Regarding the forecast for private consumption, the CFP said that the anticipated stagnation in the second half of the year contrasts with the economic policy measures that will be implemented in this period, such as the revision of the IRS (Personal Income Tax) withholding tables in September and October.
Regarding investment, the expected growth of around 7% for the second half of 2024 "seems to be based on an evolution of public investment that is difficult to realise".
For the CFP, the Ministry of Finance's current scenario still has "some significant risks", such as the possibility that the international climate could deteriorate more significantly than anticipated.
This could penalise the outlook for external demand "more intensely" and negatively affect exports.
These risks could also be reinforced by geopolitical tensions associated with the fragmentation of trade, capital flows, and technological diffusion, which will impact productivity growth.
In addition, armed conflicts could disrupt food production chains, increase the price of raw materials, and weaken investor confidence.
In terms of domestic demand, the possibility of a greater propensity for consumption on the part of families stands out as positive, combined with high savings rates, interest rate cuts, and fiscal policy measures "with a positive impact on income."
Today, the government submitted to parliament the proposed budget for 2025 (OE2025), which predicts that the economy will grow by 1.8% in 2024 and 2.1% in 2025.
According to the document, the government forecasts a surplus of 0.4% this year and 0.3% next year.
The proposal has not been approved in general, and the vote is scheduled for the 31st.
If the PSD/CDS government's budget proposal is approved in general with the PS abstention or, alternatively, with the favourable votes of the Chega, it will then be examined in parliament between 22 and 29 November. The final overall vote on the budget is scheduled for 29 November.
PE/ADB // ADB.
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