Uncertainty limits economic growth

The Portuguese economy does not escape the scenario of uncertainty, especially international and gaining new contours with the tariff war released by Donald Trump. The Organization for Economic Cooperation and Development (OECD) already points to the growth of the world economy slower than expected, especially in the US, with Portugal to maintain higher range of Gross Domestic Product (GDP) than the average of the eurozone, but to have a slight deterioration of the conjuncture.

A warning that is not surprising João César das Neves by mentioning that « The global scenario is so uncertain that it is a prudent forecast »refers to Sunrise.

According to the new predictions, the national economy should, in both 2025 and 2026, reach a 1.9% GDP variation, ie the same amount already recorded in 2024. Also the competitiveness forum maintained the estimate of a growth below 2% in 2025, given the deterioration of external perspectives and the softening of private consumption in the first trimester.

« The deterioration of external perspectives and the softening of private consumption, in addition to the very weak result of the first quarter, reinforces our expectation of a growth below 2% by 2025, », says the entity led by Pedro Ferraz da Costa and understands that the reduction of interest rates should have a limited impact on the investment, which is affected by «Defendant expectations» of increased demand and the high uncertainty.

To add to this risk also, according to the body, with the difficulties of execution of the Plan of Recovery and Resilience (PRR), awaiting its acceleration, «Multiple times announced».

More optimistic is Banco Carregosa economist, Paulo Monteiro Rosa, considering that the overhaul of OECD growth perspectives should be read as a sign of prudence, but not alarm. “OECD review does not point to a considerable weakening of the Portuguese economy, but to a more contained evolution, penalized by international factors. There is still room for growth, but in an increasingly demanding and uncertain context », Say the Sunrise and nods with positive aspects highlighted by the international body. “Private consumption remains dynamic, based on a solid labor market and expansionist budgetary policies, such as PRR investments and tax reduction. Inflation should also remain controlled, which gives some balance to the scenario »says.

Expense control

Given this instability, the OECD speaks in the return to the deficit as early as 2026. For this year it anticipates that Portugal should have a budget surplus of 0.2% of GDP, but public accounts should return to red with a budget deficit of about 0.3% of GDP next year. And waves with structural challenges for Portugal in the medium term, which will require careful management of public finances, arguing that «Regular expense review would help to meet increasing pressures on expenses arising from the aging of the population and the strong investment needs».

According to the body, « The continuation of the implementation of new accounting norms, the development of performance budgets and the reduction of tax expenses would improve the efficiency of public spending and help guide its structure for investment. ». At the same time, it also highlights the importance of Portugal being able to achieve a «Sustainable growth of productivity, increase employment and have greater efficiency of public expense»keeping a « Public debt in a firmly descending trajectory » up to 89.8% of GDP in 2026.

A measure applauded by Caesar das Neves. «It would finally have to do the state reform that has always been postponed. It is not likely, but it is the only way ». And as for the priorities highlights: «They are the usual: increased productivity and usual structural reforms».

Still, it is a scenario that may penalize companies. To the Sunrisethe president of the Portugal Business Association (AEP) admits that « OECD’s new economic projections reflect the particularly adverse world context, which results from the protectionist agenda implemented by the new US administration and its potential implications for the Portuguese economy. » and recognizes that « National companies face a challenging moment, marked by the softening of the foreign market – a consequence of the low economic growth of major business partners, geopolitical instability and increased tariff barriers to international trade, which join the numerous non -tariff barriers that also impact, also very negatively, on Portugal’s relationship with the abroad. »

For the person responsible, Oeventual Return to the deficit and the need for budgetary containment «They are not positive signs», However, it states that « At this time, the priority should be to ensure the competitiveness of Portuguese companies and the conditions favorable to their internationalization and attraction of investment».

Already Paulo Monteiro Rosa argues that, instead of austerity measures, Portugal must bet on greater efficiency of expense. « Areas with the highest adjustment potential include public administration – reduction of structures and digitization, thus increasing productivity – ineffective subsidies, poorly targeted social benefits and the state business sector»adding that restructuring deficit public companies and improving social support control should be seen as key measures. “Reducing the weight of public debt through primary surpluses would also help alleviate interest charges. The goal is to rationalize without undermining investment in strategic areas such as health, education and innovation »stresses.

Challenges of the new government

Admittedly, attention is also now turned to the new government and the police that result in. The forum for competitiveness believes that «The result of the elections seems to ensure some political stability in the short term », but it nods with medium term uncertainties. « Greater doubts reside in the ability of the new executive and the new parliament to approve the reforms that the economy needs, in order to allow a sustained increase in wages and living in Portugal».

Luís Miguel Ribeiro, on the other hand, applauds the aggregation, by the new government, from the Ministries of Economics and territorial cohesion because it is a positive sign for the realization and speeding of the measures that the Association proposes-financing of private business investment and capitalization of companies, ensuring the availability of labor, reduction of tax burden on companies and families (IRC, autonomous taxes, IRS, among others) view to sustaining the growth of the resident population and implementing the structural reforms that the country needs – because it considers that it puts the economy at the center of public policies and the development of the country. And he says that «It is awaiting strong expectation of the new Ministry of State Reform». Also Paulo Monteiro Rosa considers that the priorities of the new government should remain centered on budgetary consolidation, effective execution of European funds, especially the PRR, reinforcement of state productivity and modernization. «The sustainability of public accounts remains a central objective, along with investment in human capital, innovation and essential public services such as health and education. The stability and predictability of policies are important factors to ensure sustained trust and growth »concludes.